Amid competing narratives on whether a latest OPEC+ decision to peter out production curbs in phases was ill-timed, both US and UK crude oil futures’ prices nosedived as much as 5 per cent on Monday over frets of a steeper-than-anticipated supply glut, as a recent OPEC+ decision to hike output starting from May alongside a higher Iranian crude output had overshadowed signs of a strong economic rebound in the United States.
In factuality, in a meet of 14-member OPEC (Organization of Petroleum Exporting Countries) alongside their Kremlin-led allies, known as OPEC+, held later last week, the oil producing group had decided to hike outputs in phases starting from May, eventually sending a shockwave in global commodity market.
Apart from that, a rise in production in the US-sanction hit OPEC member Iran, had added to further strains. If truth is to be told, in the day’s heavy downpour in global oil markets was almost entirely catalysed by a Thursday decision from OPEC+ to roll out a monthly production hike from May to July, while a flurry of upbeat economic data such as a multi-decade high euro zone composite PMI alongside an all-time high US Services Sectors activity in March, had botched to avert a Monday mayhem.
Crude oil shrugs off $3 per barrel as OPEC+ output hikes weigh
Citing statistics, in the day’s commodity market wind-down, UK crude futures scheduled to be expired on June faltered 4.8 per cent to settle down at $61.78 per barrel, while US WTI (West Texas Intermediate) crude oil futures due to be expired on May, dived 5.2 per cent to $58.24 a barrel.
Meanwhile, referring to an ill-timed OPEC+ decision to hike oil productions, a director of energy future at Mizuho Securities, Bob Yawger said, “It seemed like OPEC+ was going to roll the deal, but they didn’t and now it looks like they’re going to have to pay at least in the short term.
” In tandem, although a raft of upbeat economic data across the globe led to analysts’ beliefs that the latest leg of sell-off wave in global crude oil market would likely to be short-lived, broader fundamentals remained bleaker amid a tighter lockdown measure in France alongside a spike in pandemic cases in the US and India, the world’s first- and fifth-largest economies by nominal GDP (Gross Domestic Product) respectively.