Oil prices shed over 1% on Monday despite rising tensions in the Red Sea and on the front lines of the Israel-Hamas conflict, with OPEC+ extending voluntary production cuts and demand sentiment taking a beating from an unusually mild winter.
At 2:28 p.m. ET on Monday, Brent crude was trading up 1.05% at $82.67, while West Texas Intermediate (WTI) was trading up 1.66% at $78.64.
On Sunday, OPEC+ agreed to extend its 2.2-million-barrel/day voluntary production cuts for another quarter, with this outcome already having been priced in ahead of time.
Russia also said it would deepen cuts by over 470,000 bpd in the second quarter of this year, while also easing curbs on exports. Russia already has a 500,000-bpd cut quote for production and exports. While this was a surprise move, it failed to move the oil price needle on Monday.
"With OPEC loadings appearing steady and aggregate OPEC supply potentially showing little effect from incremental voluntary cuts implemented in Q1, we do not view the extensions from the broader group as particularly impactful," Macquarie energy strategist Walt Chancellor told Reuters on Monday.
Some analysts saw this morning's brief increase in oil prices as a response to the Israel-Hamas conflict and the current stalemated ceasefire negotiations.
"The OPEC+ rollover was baked in, it's the Gaza crisis that prices are responding to," Vandana Hari, founder of Vanda Insights, told Bloomberg. "As long as the cease-fire negotiations remain in a stalemate, crude is likely to either hover around current levels or come under further upward pressure."
Rystad Energy's Jorge Leon told Reuters that OPEC+ cuts would result in 34.6 million bpd in output for Q2, down 1.4 million bpd from earlier forecasts.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
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