NEW YORK, Dec 21 – Oil prices settled lower on Thursday after Angola said it would exit the Organization of the Petroleum Exporting Countries (OPEC), raising questions about the producer group’s efforts to support prices by limiting global supplies.
Brent crude futures settled down 31 cents at USD 79.39 a barrel. US West Texas Intermediate crude futures fell 33 cents to USD 73.89 a barrel.
Earlier in the session, both benchmarks were down by more than USD 1 after Angola said it was planning to leave the group.
Angolan oil minister Diamantino Azevedo said the country’s membership in OPEC was not serving its interests. The Saudi-led producer group in recent months has been rallying support to deepen output cuts and boost oil prices.
“It seems like OPEC is losing the battle to keep prices higher,” said Matt Smith of shipping tracking firm Kpler, noting that non-OPEC producers like the US have stepped up to fill the supply gap.
Angola produces around 1.1 million barrels per day (bpd), compared with 28 million bpd for the whole group.
The country’s exit raises questions about the cohesion and direction of OPEC, even though it is one of the smallest producers and its departure may have a limited impact on global supplies, Smith said.
At a meeting in November, Angola protested a decision by OPEC to cut its production quota for 2024 to help prop up oil prices.
Separately, the US Energy Information Administration (EIA) said US crude output rose to a record 13.3 million barrels per day (bpd) last week, up from the previous all-time high of 13.2 million barrels per day.
“The US is poised to increase production in the Permian Basin and across the country,” said Tim Snyder, economist at Matador Economics in Dallas.
“We’ve mitigated price risk here in the US and really put the Russians and the Saudis back on their heels,” Snyder said.
Recent attacks carried out in support of Palestinians by Yemeni Houthi militant groups on vessels headed towards Israeli ports have forced major maritime carriers to steer clear of the Red Sea, causing global trade disruptions.
“With such a heavy load of US crude reported in increased measure, one can only assume that the market remains edgy in regard to supply diversion or even hiatus caused by the Houthi attacks on shipping,” PVM analyst John Evans said.
The conflict between Israel and Hamas intensified on Thursday amid truce talks.
(Reporting by Nicole Jao in New York; Additional reporting by Robert Harvey, Ahmad Ghaddar, Yuka Obayashi, and Sudarshan Varadhan; Editing by Paul Simao, David Gregorio, and Aurora Ellis)