Oil May Correct Up
Oil prices dropped more than $1 on Tuesday due to skepticism over an OPEC+ decision to increase supply later this year, amidst already weak global demand. Extending losses from the previous session, Brent crude futures fell $1.11, or 1.4%, to $77.25 a barrel, hitting a low of $76.76. U.S. West Texas Intermediate (WTI) crude futures declined by $1.09, or 1.5%, to $73.13.
OPEC+ agreed on Sunday to extend most oil output cuts into 2025 but allowed for gradual unwinding of voluntary cuts from October. This raised concerns about oversupply, especially with high interest rates and weak economic signals from the U.S., China, and Europe affecting oil demand.
Non-OPEC producers, particularly the U.S., are also increasing supply. Market strategist Yeap Jun Rong noted that further evidence of economic weakness could push oil prices even lower. The U.S. government is set to release inventory and demand data on Wednesday, which will indicate gasoline consumption during the Memorial Day weekend, marking the start of the U.S. driving season.
OPEC+ agreed on Sunday to extend most oil output cuts into 2025 but allowed for gradual unwinding of voluntary cuts from October. This raised concerns about oversupply, especially with high interest rates and weak economic signals from the U.S., China, and Europe affecting oil demand.
Non-OPEC producers, particularly the U.S., are also increasing supply. Market strategist Yeap Jun Rong noted that further evidence of economic weakness could push oil prices even lower. The U.S. government is set to release inventory and demand data on Wednesday, which will indicate gasoline consumption during the Memorial Day weekend, marking the start of the U.S. driving season.
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