Oil prices fell as much as 3.5% on Monday following OPEC+’s decision to start phasing out some voluntary cuts earlier than expected, amid recent oil price weakness and concerns about demand heading into 2025.
West Texas Intermediate (CL=F) futures fell below $75 per barrel, while Brent (BZ=F), the international benchmark price, hovered around $78.60 in afternoon trading. Oil futures are down about 13% from their April peak.
Monday’s heavy selling was “exacerbated by technical pressure and limited interest in buying the dip as demand was a bit weak,” Rebecca Babin, senior U.S. energy trader at CIBC Private Wealth, told Yahoo Finance.
Last weekend, the Saudi-led oil alliance extended existing cuts of 3.6 million barrels per day until the end of next year, but additional cuts of 2.2 million barrels per day would begin over the next twelve months from October onwards. to take. .
“Barring a material upside surprise in demand, the lifting of previous cuts after next September could prove premature,” Peter McNally, global head of analysts at Third Bridge, said in a note on Monday.
JPMorgan analysts viewed the move as “market neutral” for oil balances and prices in 2024, although a demand slowdown is forecast for next year.
“We have argued that the group should phase out some of the voluntary cuts in 2024 at a time when demand allows (at the cost of slightly lower prices),” wrote Natasha Kaneva, head of the global commodities strategy team at JPMorgan.
“Otherwise, OPEC’s enormous effective spare capacity – an all-time high of 4.1 million barrels per day at a time of record demand – will make it increasingly difficult to accommodate further large-scale supply cuts, which are likely to be needed in the second half of 2025 will be.”
Crude oil’s downward trend has also helped lower gasoline prices in recent weeks.
On Monday, the national average for gasoline was $3.53 per gallon, down $0.06 from a week ago, the largest weekly decline of 2024, according to AAA data.
“We are seeing an epic drop in wholesale gasoline prices and cocktail party talk will likely focus on plummeting retail sales numbers,” Tom Kloza, global head of energy analytics at OPIS, told Yahoo Finance last week.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X @ines_ferre.
