Oil prices were steadier this morning as investors prepared their portfolios heading into the long holiday weekend. Oil has pulled back sharply from Tuesday’s high, when front-month WTI briefly topped $64 per barrel.
Source: TradingView
This latest sell-off comes on fresh concerns over the increased likelihood of another bigger-than-expected increase in supply as OPEC+ continues to roll back production cuts.
Investors are mulling over reports that OPEC+ could approve a production hike of over 400,000 barrels per day at its next meeting in just over a week’s time. If so, this would be the third consecutive month of increased supply from the cartel.
This unwind is certainly adding to existing downside pressures, as there was already a supply glut coinciding with a slowdown in global demand growth. But it is certainly helping Donald Trump deliver on his promise of lower energy prices.
This looks to be Saudi Arabia’s motivation for unwinding production cuts, although there’s also the issue of punishing OPEC+ members who have broken agreements to limit supply. In the meantime, downside pressure has been exacerbated by an unexpected build in US crude inventories as reported this week.
In other news, the US and Iran will hold another round of talks today, while reports that Israel was preparing to attack Iran’s nuclear facilities have proved to be unfounded, so far.
