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- WTI price advances even as global supply concerns mount after OPEC+ moves to accelerate production hikes.
- The OPEC+ has pledged an additional 411,000 barrels per day (bpd) increase for June.
- Oil prices remain vulnerable due to recession worries and sluggish demand for refined fuel imports.
West Texas Intermediate (WTI) crude Oil is demonstrating a recovery during Tuesday’s Asian trading session, trading around $57.60 per barrel. This upward movement follows a nearly 2% decline observed on Monday. However, the price gains are being tempered by growing anxieties regarding increased global supply in the wake of a recent decision by OPEC+ to further accelerate production increases. Market participants are carefully weighing the impact of these supply adjustments against the backdrop of fluctuating global demand.
During the previous week, OPEC+, the alliance comprising the Organization of the Petroleum Exporting Countries and its associated partners, reached an agreement to escalate production for the second consecutive month. The group announced an additional increase of 411,000 barrels per day (bpd) slated for June. This increment, allocated among eight member nations including Russia, brings the cumulative production increase for April, May, and June to a substantial 960,000 bpd. According to estimates from Reuters, this effectively reverses approximately 44% of the 2.2 million bpd in voluntary cuts that have been in effect since 2022. The market is now closely monitoring how this increased supply will impact global oil inventories and pricing dynamics.
Sources familiar with the matter within the OPEC+ group have indicated to Reuters that the organization could potentially reverse its voluntary production cuts entirely by the end of October, contingent upon improved adherence to agreed-upon output quotas among member states. Reportedly, Saudi Arabia is exerting pressure on the group to expedite the rollback of these cuts as a means of addressing instances of non-compliance, specifically targeting Iraq and Kazakhstan for their repeated failures to meet their designated production targets. This internal pressure highlights the ongoing challenges in maintaining cohesion and adherence to production agreements within the OPEC+ framework. Furthermore, analysts suggest that the potential for a full reversal of cuts could exert downward pressure on oil prices in the latter half of the year, particularly if global demand growth remains subdued amid concerns of a potential economic slowdown.
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