Energy
Wednesday, June 5th, 2024 4:47 pm EDT
Key Points
- Crude oil futures are nearing four-month lows following a selloff triggered by OPEC+’s decision to increase production.
- Both U.S. crude and global benchmark Brent have experienced nearly a 5% decline after eight OPEC+ members agreed to phase out 2.2 million barrels per day in production cuts.
- Prices initially showed positivity in morning trading but turned negative later due to rising U.S. crude inventories. Warren Patterson of ING believes the selloff is overdone, emphasizing that OPEC+ won’t begin increasing production until October, and the global oil balance sheet will tighten beforehand.
Crude oil futures are nearing four-month lows as a result of a recent decision by OPEC+ to boost production, leading to a significant sell-off this week. Both U.S. crude and global benchmark Brent have experienced nearly a 5% decline following the agreement by eight OPEC+ members on Sunday to gradually increase production by 2.2 million barrels per day. Despite positive morning trading on Wednesday, prices turned negative later in the session due to data revealing a rise in U.S. crude inventories. However, Warren Patterson, head of commodities strategy at ING, believes that the selloff is excessive, emphasizing that OPEC+ won’t commence increasing production until October, and the global oil balance sheet will tighten prior to that. The current energy prices include the West Texas Intermediate (WTI) July contract at $73.08 per barrel, down 13 cents, and the Brent August contract at $77.44 per barrel, down 6 cents. Rising U.S. oil inventories further impacted prices on Wednesday, with crude stockpiles increasing by 1.2 million barrels last week, surpassing analyst expectations. Despite this, Bob Yawger, executive director of energy futures at Mizuho Securities, predicts a potential rally for U.S. oil prices back to a range of $76.15 to $80.62 per barrel in the coming days. Helima Croft, head of global commodity strategy at RBC Capital Markets, highlights that the OPEC+ plan is not binding and that Saudi Arabia will monitor market conditions closely, potentially adjusting production levels if necessary to avoid oversupply or market instability.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/05/crude-oil-prices.html
