Brent traded at $76.76, less than $2 short of this year’s low of $74.79 at the beginning of January
Oil prices dropped more than $1 a barrel 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 reached on Monday, Brent crude futures settled down 84 cents, or 1.07%, at $77.52 a barrel. Brent’s closing price on Monday was below $80 for the first time since February 7 after dropping more than 3%.
At its lowest on Tuesday, Brent traded at $76.76, less than $2 short of this year’s low of $74.79 at the beginning of January.
U.S. WTI crude futures closed down 97 cents, or 1.31%, at $73.25. West Texas Intermediate had dropped by 3.6% on Monday to settle near a four-month low.
The 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.
My base case is that the market is over-reacting to the OPEC announcement, according to Phil Flynn with Price Futures Group.
The planned October unwinding adds jitters about oversupply in an environment where traders are already spooked about high interest rates impacting global economic activity. A steady flow of dim signals from major economies like the U.S., China and Europe suggest that their appetite for oil may not be as healthy as hoped through the rest of the year.
If we do see a significant decline in oil prices, then you will have to question the soundness of global economy, Flynn added. Then it will look like the Fed has done too much.
