Oil futures retreated this week as the market grew more skeptical on how OPEC would implement a plan to curb oil output a day after the group agreed to limit production.
Benchmark prices had initially extended gains made in the previous session following the decision by the OPEC) to reduce its aggregate output by 700,000-800,000 barrels per day (bpd), or to around 32.5 million to 33 million bpd.
But Brent and U.S. West Texas Intermediate (WTI) retreated from their highest levels in more than two weeks as the market began to focus on the lack of hard facts about the deal. “Investors and traders are skeptical – with good reason. More cynical traders are questioning the complete lack of detail, including the potentially problematic question of which nations will curtail production,” Michael McCarthy, chief market strategist at Sydney’s CMC Markets, told Reuters.
OPEC said each member’s output cuts will be decided at its next formal meeting in November, when an invitation to join the deal could also be extended to other producers such as Russia.
Goldman Sachs said the deal should add $7 to $10 to oil prices in the first half of next year, but added that longer term it was skeptical on the implementation of the proposed quotas.
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