Crude oil prices extended their decline today as traders remained fixated on demand and the impact of the tariff war between the U.S. and China on its future prospects.
At the time of writing, Brent crude was trading at $65.41 per barrel, with West Texas Intermediate at $61.63 per barrel, both down from opening.
Besides the tariff exchange, which has already hurt energy trade between the United States and China after the latter imposed retaliatory tariffs on U.S. crude oil and natural gas, OPEC+ is also keeping oil traders awake at night.
After the cartel surprised everyone by deciding to boost production in May by about three times the original amount, now there are reports it might do the same in June. Reuters broke the news last week, citing unnamed sources as saying several OPEC members would suggest another substantial output hike for the following month.
The publication also suggested that the motivation behind the more robust than originally planned output boost was overproduction by Iraq and Kazakhstan, especially the latter. To add insult to injury, Astana earlier this month said it could not curb production in line with OPEC+ quotas because it could not order international oilfield operators around, after it pledged to compensate for its overproduction.
“Kazakhstan’s statement cements our view that OPEC+ may implement another accelerated three-month unwind again in the May meeting and it may continue again in July and through the summer,” Energy Aspects’ Amrita Sen said at the time.
A further bearish factor for oil prices, U.S.-Iran nuclear talks seem to be making some progress, which means there is a chance that U.S. sanctions on Iranian oil will be lifted at some point in the future. That chance is pressuring prices right now.
ING’s commodity analysts, meanwhile, reported Monday that traders had boosted their net long positions on Brent crude after two weeks of reductions. Most of that boost came from the liquidation of short positions, the Dutch bank’s team said.
By Irina Slav for Oilprice.com
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