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 were down $1.11, or 1.4 per cent, at $77.25 a barrel by 1336 GMT. Brent’s closing price on Monday was below $80 for the first time since Feb. 7 after falling more than 3 per cent.
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.
US West Texas Intermediate crude futures eased by $1.09, or 1.5 per cent, to $73.13. WTI had fallen by 3.6 per cent on Monday to settle near a four-month low.
The Organisation of the Petroleum Exporting Countries and allies led by Russia, together known as Opec+, agreed on Sunday to extend most of their oil output cuts into 2025 but left room for voluntary cuts from eight members to be unwound gradually, 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.
The planned October unwinding adds jitters about oversupply in an environment where traders are already spooked about high interest rates hampering global economic activity, with a steady flow of dim signals from major economies such as the United States, China and Europe suggesting that their appetite for oil may not be as healthy as hoped through the rest of the year.
On top of this, supply is rising from non-Opec producers such as the US
“With the ‘bad news is bad news’ mantra in place, further evidence of economic weakness may lead oil prices lower,” IG market strategist Yeap Jun Rong said in an email.
The US 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 US driving season.