Oil falls 3% as OPEC decision fails to ease demand concerns; Brent crude at $78.35/bbl

On Sunday, OPEC+ extended most of its significant oil production cuts until 2025, while allowing voluntary cuts among the eight core members to gradually ease from October. In addition, the group set a new production target for the United Arab Emirates, which was advocating for higher shares.

Also Read: Expert View | OPEC to extend supply curbs to 2 hours; Crude oil seen at $70-90 in 2024: Kotak’s Kaynat Chainwala

Brent crude futures were down $2.76, or 3.4 percent, at $78.35 a barrel by 11:37 a.m. ET (1539 GMT). U.S. West Texas Intermediate crude futures were also down $2.80, or 3.6 percent, at $74.19 a barrel. These figures mark the lowest point for both contracts since early February.

“Crude oil prices have seen significant volatility over the past week, falling ahead of the upcoming OPEC+ meeting and a surprise drop in US gasoline demand. According to the US Energy Information Administration (EIA), US crude oil inventories fell by 4.2 million barrels last week, beating the expected 1.6 million barrel drop. Despite the summer peak, gasoline demand unexpectedly fell about 2 percent from the previous week to 9.15 million barrels per day. This drop in demand has sent US gasoline futures to three-month lows,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

What is weighing on the price of crude oil?

Indications of a slowdown in demand expansion have put pressure on oil prices, with attention now turning to US fuel consumption data.

The U.S. Energy Information Administration is set to release its forecasts for oil inventories and fuel use on Wednesday, shedding light on the extent of gasoline consumption over the Memorial Day weekend, marking the start of the U.S. driving season.

Also Read: Oil snaps 3-day winning streak, tumbles 2% on weak US demand; Brent fell 6% in May ahead of the OPEC+ verdict

“Crude oil prices also fell in anticipation of the OPEC+ meeting scheduled for Monday. A rebound in the dollar index helped lower oil prices. However, lower US inflation and a potential increase in demand during the peak summer season could provide support for oil prices at lower levels. We expect crude oil prices to remain volatile in today’s session. Crude oil has support at $76.60-76.10 and resistance at $77.90-78.70 in today’s session,” added Kalantri.

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Published: 03 Jun 2024, 22:20 IST