As an OPEC+ agreement to cut output by 100,000 barrels per day in October was considered mostly a symbolic attempt to support prices following the market’s recent drop, oil prices moved down on Tuesday, reversing gains from the previous session.

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By 0638 GMT, the price of Brent (BNO) oil futures had dropped 49 cents, or 0.5%, to $95.25 per barrel. Inching up from Monday to $88.94 a barrel, U.S. West Texas Intermediate oil futures were $2.07, or 2.4%, higher than Friday’s finish. On Monday, which was a U.S. vacation for Labor Day, there was no resolution.

After top producer, Saudi Arabia, and other members expressed worry about the decline in prices since June despite tight supply, the Organization of Petroleum Exporting Countries and allies led by Russia, collectively known as OPEC+, opted to reverse a 100,000-BPD increase for September. Analysts said the cut was primarily symbolic and had no effect on real supply because OPEC+ had been producing below output objectives even after Saudi Arabia stated it wanted to support prices.

What Do Experts Predict?

ING’s director of commodities strategy, Warren Patterson, stated in a note that despite the fact that the headline figure is for a 100 mbbls/d decrease, the actual cut will be substantially less than that. The majority of producers have struggled to meet their goals and are currently producing far less than they should be.

However, Noah Barrett, research analyst for energy and utilities at Janus Henderson Investors, said that the action was significant in terms of signaling since it indicates that OPEC+ is watching demand very closely and is attempting to limit supply to keep a floor on oil prices.

According to Tina Teng, an analyst at CMC Markets, other factors affecting the market included a lower prognosis for oil consumption owing to the resumption of lockdowns in some areas of China and a decision to restrict the price of Russian oil shipments. At the Eastern Economic Forum in Vladivostok on Tuesday, Russia’s energy minister, Nikolai Shulginov, told reporters that his country will increase shipments to Asia in reaction to oil price limitations.

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