U.S. crude oil falls more than 3% as OPEC+ plans to phase out voluntary production cuts

Environment

The OPEC logo on the building of the Organization of the Petroleum Exporting Countries.
Thomas Coex | Afp | Getty Images

Crude oil futures were little changed on Monday as investors tried to parse the impact OPEC’s weekend decision on production policy will have on the market.

OPEC+ agreed to extend 3.6 million barrels per day in production cuts through the end of 2025. But Saudi Arabia, Russia and several other countries will gradually phase out a separate round of 2.2 million bpd in cuts over 12 months starting this October.

Here are today’s energy prices:

  • West Texas Intermediate July contract: $76.91 a barrel, down 8 cents. Year to date, U.S. crude oil has gained 7.1%.
  • Brent August contract: $81.06 a barrel, down cents. Year to date, the global benchmark has gained 5%.
  • RBOB Gasoline July contract: $2.42 a gallon, up 0.24%. Year to date, gasoline futures are up 15%.
  • Natural Gas July contract: $2.74 per thousand cubic feet, up 6.11%. Year to date, gas is up 11.3%.

“It now appears OPEC+ will add volumes to the market beginning in Q4’24 which may create a modest oversupply and downward price pressures,” Wells Fargo analysts led by Roger Read told clients in a note.

But JPMorgan analysts said the decision by OPEC+ Sunday is largely neutral for global oil prices in 2024. The production cuts combined with summer driving should increase Brent prices by $10 to the $90-per-barrel range by September, according to the investment bank.

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