The oil market continued its downward spiral on Wednesday, as US crude prices hit a six-month low after plummeting below $70 per barrel.

This decline comes as traders anticipate an increase in oil supplies following the inability of the OPEC+ producer alliance to convince the market that it could significantly boost output cuts.

New York-traded West Texas Intermediate (WTI) crude for January delivery closed at $69.38 per barrel, marking a $2.94 drop, or a 4.1 percent decrease for the day. Earlier, WTI hit its lowest point in six months at $69.12 per barrel before correcting up slightly on closing.

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Since mid-October, the US crude benchmark has witnessed a nearly 22 percent loss in value.

This drop initially began due to signs of weak seasonal demand and was further exacerbated by concerns that OPEC+ oil producers would not adhere to their promised production cuts for 2024.

Meanwhile, the Brent crude, represented by its most-active February contract, settled at $74.30 per barrel, down $2.90 or 3.8 percent for the day, following a six-month low at $74.13. The London-traded Brent has experienced nearly a 20 percent decline since mid-October.

The OPEC+ alliance, consisting of the 13-member OPEC led by Saudi Arabia and ten independent oil producers including Russia, has slashed production of between 4.0 and 5.0 million barrels per day since last year.

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Fawad Razaqzada, an analyst at London's City Index, commented on the situation, saying, "It also doesn’t help when you hear headlines like Saudi Arabia is lowering their prices for crude destined for the Asian market."

"The fact that the US is exporting nearly 6 million barrels of the black stuff per day also makes the job of oil producers in the OPEC+ group difficult, as they have to give up more market share as part of their agreement to withhold supplies. Some can’t afford to lose market share to the US, so they are not comfortable to cut further."

Razaqzada further noted that the global economy is facing stagnation due to long-standing high interest rates and the ongoing impact of inflation.

"The disinflationary process has been so slow," he added. "Oil prices are demand-inelastic anyway, which means the supply-side of the equation has a much larger impact."

Last week, oil prices tumbled by over 2 percent in response to the OPEC+ group's decision to implement voluntary oil production cuts for the first quarter of the upcoming year, which fell short of the expectations prevailing in the market.

Key OPEC+ members, including Saudi Arabia and Russia, who together account for over 40% of global oil production, decided to implement voluntary production cuts, nearly reaching 2 million barrels per day (bpd) for the first quarter of 2024.

However, it became apparent that at least 1.3 million bpd of these cuts were essentially an extension of the voluntary reductions that Saudi Arabia and Russia had already been implementing. Earlier discussions had suggested the possibility of additional cuts of up to 2 million bpd.

Russian President Vladimir Putin made a two-stop trip to the region on Wednesday, visiting the UAE and Saudi Arabia, on a one-day snap tour before returning to Moscow, where he will meet his Iranian counterpart on Thursday.

His schedule, which was suddenly announced on Tuesday, included meeting with his Arab counterparts to discuss a range of topics, including the energy sector, and the Israeli war on Gaza and Ukraine.