Oil prices experienced a decline on Wednesday following the conclusion of the COP28 climate talks in Dubai. At the conference, participating nations made a commitment to drastically reduce the use of fossil fuels, including oil, coal, and natural gas, in a swift and organized manner. While this agreement did not provide a specific timeline for the transition or require a complete phase-out of fossil fuels, it did mark the first time that parties agreed to decrease oil and gas consumption, rather than solely focusing on emissions reduction or renewable energy expansion.
The impact of this decision was evident in the market, with West Texas Intermediate (WTI), the benchmark for oil prices in the United States, dropping 0.9% to $68 per barrel. Similarly, Brent crude, the global standard, also experienced a 0.9% decline, reaching $72.62 per barrel. Currently, both WTI and Brent crude contracts are trading at their lowest levels in six months.
In addition to the outcome of the climate talks, oil prices were influenced by recent U.S. inflation data as the Federal Reserve prepares to make an interest-rate decision. The release of this data has tempered speculation about early rate cuts in the coming year, which could have boosted energy demand.
Meanwhile, the Energy Information Administration (EIA) revised its oil price forecast for next year, despite OPEC’s recent agreement to extend output cuts. The EIA’s revised projection suggests that oil prices may face further challenges in the near future.
