One of the shortest price increases for oil following an OPEC+ summit occurred on Monday. Brent crude and West Texas Intermediate both modestly increased during the day after the oil-producing group announced it will reduce its production by an additional 800,000 bpd, but by Tuesday morning the impetus had faded and both important benchmarks were down.
West Texas Intermediate was trading at $71.93 per barrel and Brent crude was priced at $76.52 per barrel at the time of writing, both down less than 0.5 percentage points from yesterday. Brent crude increased by almost $2.60 per barrel on Monday, while WTI increased by more than $3 per barrel.
Oil Prices
As concern over the status of the global economy is prevalent, it appears that traders are skeptical about the significance of any more reduction by OPEC+. A voluntary drop of 1 million bpd was announced by Saudi Arabia on Sunday, although the UAE was permitted to increase its supply by roughly 200,000 bpd.
Following OPEC’s output cuts, supply-side issues gained prominence. The increases were, however, modest due to persistent concerns about the economic environment, according to ANZ analysts, whose note was reported by Reuters earlier today.
- OPEC+ summit reduces production, oil prices rise, benchmarks decline.
- Global economic concerns over OPEC+ reduction raise doubts about its significance.
- US manufacturing sector contracts, causing recession, lower fuel demand, negative attitude.
A very robust summer travel season is expected in the U.S., said Edward Moya of OANDA, cited by Reuters, which will cause a spike in jet fuel demand and petrol prices.
According to data on the U.S. manufacturing sector, the sector has been contracting for seven consecutive months, which is consistent with the definition of a recession. This has lowered the demand for fuels and strengthened a negative attitude among oil traders.
While prices at the pump are significantly lower than they were at this time last year, the summer driving season, which is peak demand season, may live up to its moniker, which might alter traders’ perception.
