Crude oil futures ended Monday’s trading session lower after unsettled trading, as Saudi comments indicated Opec+ would extend supply cuts supported prices, but concerns U.S. tariffs on China and Mexico would hurt demand weakened the market.
Opec+, which includes most Opec members, along with a number of non-producers led by Russia, since Jan. 1, has operated under an agreement to cut 1.2 million barrels per day (Mmbpd) of crude from the market.
“We will do what is needed to sustain market stability beyond June. To me, that means drawing down inventories from their currently elevated levels,” Energy minister Khalid al-Falih was quoted as saying by the Saudi-owned Arab News newspaper.
Front-month Brent crude futures fell 71 cents, or 1.2%, to $61.28 per barrel – a four-month low. Prices dropped by more than 3% last Friday, with May recording the biggest monthly loss in six months, Kallanish Energy reports.
Brent crude prices have dropped almost 20% from their 2018 peak, as global supplies tighten following output curbs by Opec+, as well as a reduction in Iranian and Venezuelan exports due to U.S. sanctions.
U.S. West Texas Intermediate crude futures dropped 25 cents, to $53.25/Bbl, slipping 0.5% to the weakest closing price since Feb. 12. Earlier in the session, WTI hit a session high of $54.63/Bbl.
The recent selloff likely helped to solidify the intention of Saudi Arabia to keep tightening output, analysts said.
Saudi Arabia pumped 9.65 Mmbpd of crude in May, a deeper cut than its production target under the global pact to reduce oil supply, a Saudi oil industry source told Reuters. The nation’s output target under the Opec+ agreement is 10.3 Mmbpd.
A planned June 4 strike by Norwegian workers could also lead to tighter global supply and buttress prices, potentially cutting Norway’s oil and gas output by roughly 440,000 barrels of oil-equivalent per day if mediation efforts fail. (See story elsewhere in this issue.)
Concerns that a U.S.-China trade war, and threats of tariffs on Mexico from the U.S., would diminish global crude demand, however, weighed on oil prices.
This post appeared first on Kallanish Energy News.