Oil prices fell to four-month lows on Tuesday after OPEC+ signalled it would begin tapering production cuts this year, adding to demand concerns from weak Chinese economic data.
As of 14:17 ET (18:17 GMT), West Texas Intermediate crude futures dropped 1.1% to $73.40 a barrel, and Brent oil futures fell 0.9% to $77.63 a barrel. Both contracts had already slid over 3% on Monday, reaching their lowest levels since early February.
OPEC+ Production Cuts
OPEC+ announced it would maintain 3.6 million barrels per day (bpd) of production cuts until the end of the year but left room to gradually unwind 2.2 million bpd of voluntary cuts from the end of September 2024. Analysts noted that the market expected cuts to remain through the year, causing Brent crude to tumble as investors weighed rising supply against an uncertain economic backdrop. However, OPEC+ hinted that these cuts could be paused if market conditions warrant.
Economic Concerns
Weak purchasing managers index data from the U.S. showed manufacturing activity contracted for a second consecutive month in May, raising fears of decreased demand in the world’s largest fuel consumer due to high inflation and interest rates.
Upcoming Data
Attention is now on U.S. labor market readings, which will influence interest rate outlooks. Additionally, the American Petroleum Institute will release its weekly U.S. crude stockpile estimates later, with official readings due Wednesday. Recent data has shown softer demand for products like gasoline, despite the start of the summer driving season
