Home Business News Oil continues to decline to more lows in three months as OPEC moves to phase out of production cuts

Oil continues to decline to more lows in three months as OPEC moves to phase out of production cuts

3rd Jun 24 1:19 pm

Oil prices continue to decline today by 0.2% across both major benchmarks, West Texas Intermediate (WTI) and Brent, which have reached further lows in more than three months.

Today’s oil decline came despite the outcomes of the meeting of the Organization of Petroleum Exporting Countries and Russia (OPEC+), which was in favor of extending the voluntary reduction in production by 2.2 million barrels per day for an additional three months.

At the same time that extending the production cut in itself was no longer an incentive in itself for investors to pay crude prices, the organization began scheduling the cessation of this voluntary cut on a monthly basis that will extend from October to September of the year 2025. While the markets are looking for more bullish incentives and a reduction in supply to drive prices and not the to increase it.

While restoring strong global economic growth to drive demand growth remains the most important factor in reducing excess supply and supporting prices. While Chinese economic data attracts the most attention from markets.

Indeed, the performance of manufacturing activity in May helped limit the losses in oil prices today, with growth at the fastest pace since June of 2022 in light of the growth of orders, new works, and domestic and foreign demand, according to the S&P Global Manufacturing PMI report. However, this growth was in line with market expectations and was only a little far from the previous reading.

While the report mentioned of continued positive sentiment about the possibility of improving internal and foreign demand. This optimism comes despite weak consumer demand in China and the weak performance of the global economy – which China is counting on to support its economic growth in light of weak domestic demand – which suffers from high interest rates and uncertainty.

This week will also be full of important data, most notably a series of US labor market data, which will help markets strengthen expectations about the potential path of interest rates, which are not expected to begin to decline before next September.

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