Oil prices fell as much as 3.5% on Monday after OPEC+ decided to begin unwinding some voluntary cuts earlier than expected, raising demand concerns heading into 2025.
West Texas Intermediate crude futures (CL=F) settled at $74.27 per barrel, while Brent crude (BZ=F), the international benchmark, closed at $78.36 per barrel. Oil futures are down nearly 13% from their peak in April.
Monday’s sell-off “was exacerbated by technical pressure and limited interest in buying the dip as demand was a bit soft,” Rebecca Babin, senior US energy trader at CIBC Private Wealth, told Yahoo Finance.
Over the weekend, the Saudi Arabia-led oil coalition extended its current cuts of 3.6 million barrels per day until the end of next year, but additional cuts of 2.2 million barrels per day will begin to ease over the next 12 months, starting next October. .
“Barring a material upward surprise in demand, lifting previous cuts after next September may be premature,” Peter McNally, chief global analyst at Third Bridge, said in a note on Monday.
JP Morgan analysts saw this move as “market neutral” for oil balances and prices in 2024, despite the expectation that demand will slow next year.
“We have been saying the group should back off some voluntary cuts in 2024 at a time when demand allows (at the expense of slightly lower prices),” Natasha Caneva, head of JPMorgan’s global commodities strategy team, wrote.
“Otherwise…OPEC’s massive effective spare capacity – a historic high of 4.1 million barrels per day at a time of record demand – will make it more difficult to absorb further widespread supply cuts when they will likely be needed in the second half of 2017.” 2025.”
The downward trend in crude oil has also helped cushion gasoline prices in recent weeks.
On Monday, the national average for gasoline was $3.53 per gallon, down $0.06 from last week, the largest weekly decline of 2024, according to AAA data.
“We are seeing a significant decline in wholesale gasoline prices, and cocktail party chatter will likely focus on lower retail numbers,” Tom Kloza, global head of energy analysis at OPIS, told Yahoo Finance last week.
Ince Ferry is Yahoo Finance’s chief business correspondent. Follow her on X in @ines_ferre.
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