LONDON: Oil prices fell more than $1 on Tuesday on scepticism about an OPEC+ decision to boost supply later this year into a global market where demand has already shown signs of weakness.
Extending losses from a four-month low in the previous session, Brent crude futures fell $1.13, or 1.4%, to $77.23 a barrel at 1210 GMT. Brent on Monday closed below $80 for the first time since Feb. 7, after falling more than 3%.
At its lowest on Tuesday, Brent traded at $76.76, less than $2 shy of this year’s nadir of $74.79 at the beginning of January.
U.S. West Texas Intermediate crude futures eased $1.21, or 1.6%, to $73.01 a barrel. WTI on Monday fell by 3.6% to settle near a four-month low.
The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, on Sunday agreed to extend most of their oil output cuts into 2025 but left room for voluntary cuts from eight members to be gradually unwound beginning in October.
“The market reaction is depressing to anyone who produces oil and brings elevated joy for consumers,” said Tamas Varga of oil broker PVM.
OPEC+ extends deep oil production cuts into 2025
The planned October unwinding adds jitters about oversupply into an environment where traders are already spooked about high interest rates hampering global economic activity, as a steady flow of dim signals from major economies like the U.S., China and Europe suggests their appetite for oil may not be as healthy as hoped through the rest of the year.
On top of this, supply is also rising from non-OPEC producers such as the U.S.
“With the ‘bad news is bad news’ mantra in place, further evidence of economic weakness may lead oil prices lower, potentially paving the way for a retest of the lower end of its month-long range at the $72 level,” IG market strategist Yeap Jun Rong said in an email.
The U.S. government will release inventory and product supplied data on Wednesday.
Product supplied, considered a proxy for demand, will show how much gasoline was consumed around the Memorial Day weekend, the start to the U.S. driving season.
“How demand for oil will develop in the coming quarters is … likely to be crucial,” said Carsten Fritsch, an analyst at Commerzbank.