By Nicole Jao
NEW YORK (Reuters) -Oil prices slipped around 2% on Friday following a volatile week, as the market kept a wary eye on the latest round of OPEC+ production cuts.
Brent crude futures for February fell by $1.53, or 1.89%, to $79.33 a barrel by 2:01 p.m. EST (1901 GMT) on their first day as the front-month contract.
U.S. West Texas Intermediate crude futures (WTI) dropped $1.53, or 2.01%, to $74.43 a barrel.
Both benchmarks were on track to post weekly losses, with WTI set to fall about 1.2% and Brent 1.3%.
OPEC+ producers agreed on Thursday to remove around 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year, with the total including a rollover of Saudi Arabia and Russia’s 1.3 million bpd of current voluntary cuts.
Traders viewed the announcement with some skepticism, OANDA analyst Craig Erlam said.
“(It) seems traders either aren’t buying that members will be compliant or don’t view it as being sufficient,” Erlam added.
OPEC+, which pumps more than 40% of the world’s oil, is focusing on reducing output as prices have fallen from about $98 in late September amid concerns over weaker economic growth in 2024.
The cuts “will not stop a billowing cloud of confusion that is going to take the oil market weeks and months to figure out, and only if the self-reporting data is indeed reliable,” PVM analyst John Evans said.
In the United States, Federal Reserve Chair Jerome Powell said on Friday that the central bank would move “carefully” on interest rates as risks of “under- and over-tightening are becoming balanced.”
Meanwhile, Chicago Federal Reserve Bank President Austan Goolsbee said on Friday he believes U.S. inflation is on track for the Fed’s 2% target.
U.S. manufacturing remained subdued and factory employment fell in November, according to a survey.
Investors are keeping a watchful eye on global manufacturing activity, which remained weak during the month on poor demand, surveys showed.
On Friday, talks to extend a week-long truce between Israel and Palestinian militant group Hamas collapsed, prompting a resumption in the war in Gaza, which could lead to disruption in global oil supply.
Also on the supply side, the United States on Friday imposed additional sanctions related to the price cap on Russian oil, targeting three entities and three oil tankers.
U.S. oil rigs rose five to 505 this week, their highest since September, energy services firm Baker Hughes said in its closely followed report on Friday. [RIG/U]
Elsewhere, at the two-week COP28 summit in the UAE on Friday, U.N. Secretary General Antonio Guterres called for a future with no fossil fuel burning at all.
(Reporting by Nicole Jao, Robert Harvey, Laura Sanicola and Sudarshan Varadhan;Editing by Marguerita Choy, Jane Merriman, Will Dunham and Emelia Sithole-Matarise)
