Oil prices hold near six-month lows

An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS/File Photo

LONDON  – Oil prices stabilized on Wednesday, but remained near six-month lows after a more than 3 percent drop in the previous session, with investors concerned about oversupply and waning demand.

Brent crude futures for February were up 15 cents, or 0.2 percent, at $73.39 a barrel at 1437 GMT. U.S. West Texas Intermediate crude futures for January gained 18 cents, or 0.26 percent, to $68.79 a barrel.

Brent futures closed at their lowest since late June on Tuesday at $73.24 a barrel, incurring a $2.79 a barrel day-on-day loss. At their intra-day low on Wednesday, Brent futures touched a fresh six-month low of $72.29 a barrel.

“Concerns around the global economy next year, a weak commitment to output cuts from OPEC+ and higher output elsewhere, including record levels in the United States, is weighing heavily on prices into year-end,” said OANDA analyst Craig Erlam.

READ: OPEC+ agrees to deepen voluntary oil output cuts

In its latest monthly oil market report, OPEC blamed the latest crude price slide on “exaggerated concerns” about oil demand growth.

The group of oil producing nations kept its forecast for world oil demand growth unchanged for 2024 at 2.25 million barrels per day (bpd).

Investors will be looking ahead to the U.S. Federal Reserve’s policy decision later on Wednesday, where interest rates are largely expected to be left unchanged for a third time in a row.

READ: Fed likely to hold rates steady, signal small decline in 2024

Markets have priced in “aggressive rate cuts” for 2024, said Yeap Jun Rong, market strategist at IG. “Any disappointment on that front could strengthen the U.S. dollar and weigh on the risk environment,” pushing down oil prices, Yeap said.

Elsewhere on Wednesday, nearly 200 nations reached an historic deal at the COP28 conference to begin reducing the global consumption of fossil fuels, meant to send a signal to investors in oil and other fossil fuels.

READ: COP 28 adopts world-first ‘transition’ from fossil fuels

Saudi Arabia’s energy minister said he was in agreement with the COP28 presidency on the final deal, adding that it would not affect the Kingdom’s hydrocarbon exports.

Israel said it will continue its war in Gaza whether or not it has international backing, after the United Nations passed a resolution calling for a ceasefire and U.S. President Joe Biden warned that Israel was starting to lose support because of civilian deaths.