Crude prices experienced a decline after Angola's decision to exit the OPEC

The prices of major international and US crude contracts plummeted over 1.5 percent following Angola's announcement of its departure. This move came in response to Angola's reluctance to comply with the additional production cuts that OPEC, along with 10 Russian-led allies, had agreed upon the previous month. However, these price drops were somewhat mitigated as they later recovered from their initial losses.

To bolster prices, the OPEC+ alliance had been implementing substantial supply cuts of more than five million barrels per day (bpd) since the end of 2022. Despite these efforts, oil prices dipped to their lowest levels in nearly six months after the recent OPEC+ decision. Factors contributing to this downturn include record-level oil production in the United States, Brazil, and Guyana, coupled with concerns about weakened global economic conditions affecting demand.

Ricardo Evangelista, an analyst at ActivTrades, noted that while Angola's departure impacts OPEC, particularly as a producer with a daily output of 1.1 million barrels, it would have been more significant had a larger producer, such as Iraq, made a similar move. Evangelista emphasized the unfortunate timing of Angola's exit, highlighting the challenge for the cartel in persuading its members to voluntarily curtail production to stabilize prices.

Meanwhile, on Wall Street, the three major indices rebounded at the start of trading following a previous day's decline. The Dow, comprising blue-chip stocks, showed a 0.7 percent increase in late-morning trading, while the broader S&P 500 rose by 0.8 percent, and the tech-heavy Nasdaq climbed 0.9 percent. analyst Patrick O'Hare suggested that the rebound indicated Wednesday's sell-off might have been more attributed to specific trading behaviors rather than a unanimous decision by investors to take profits. The upward trend in US equities since late October has been notable, driven by easing inflation and signals from the Federal Reserve regarding potential interest rate cuts in 2024.

Recent US data has depicted a moderation in inflation and softening job market conditions. Despite these indicators, the US central bank appears committed to managing inflation while averting an economic downturn.


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