SlavkoSereda/iStock via Getty Images
Crude oil futures fell to their lowest levels since early February on Monday as traders assessed OPEC+’s decision to extend production cuts into 2025 while beginning to unwind some additional voluntary cuts after the third quarter of the year earlier than expected.
Goldman Sachs Analysts at Sachs said the decision was Bearish on oilDespite the recent increase in global oil inventories, the gradual lifting of voluntary production cuts shows the strong desire of some OPEC+ members to resume production.
“If the market performs weaker than OPEC’s optimistic expectations, communication of a surprisingly detailed default plan to unwind additional production cuts will make it more difficult to maintain low output,” Goldman Sachs said.
Signs of weak demand growth have also weighed on oil prices recently, with the U.S. Energy Information Administration on Wednesday releasing estimates of oil inventories and fuel demand, data that will show how much gasoline is consumed around the Memorial Day weekend during the U.S. driving season.
Again Capital’s John Kilduff told Reuters he believed the market was well supplied and that “if we don’t get amazing data on Memorial Day” it would be “game over” for crude prices.
US July front-month gasoline futures (XB1:COM) ended -3.4% to $2.3356/gallon, the lowest settlement price in more than three months.
Nymex front-month crude oil (CL1:COM) for July delivery has ended -3.6% to US$74.22/barrel, falling for the fourth consecutive day and the largest single-day decline since January 8. Brent crude oil (CO1:COM) closed in recent months. -3.4% To $78.36/barrel, it was also the fourth consecutive decline and the largest single-day percentage drop since December 12.
ETF: (New York Stock Exchange: Use), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UGA)
The U.S. Department of Energy said on Monday that the United States will purchase an additional 3 million barrels of oil for its strategic petroleum reserve at an average price of $77.69 per barrel.
The Biden administration said the increase was part of an ongoing series of purchases aimed at restoring SPR levels while U.S. crude prices remain below $80 a barrel.
The U.S. Department of Energy said the reserves stood at 370.2 million barrels as of Friday, including 143.8 million barrels of sweet crude and 226.4 million barrels of sour crude, which remains the lowest level of SPR crude since November 1983.
