Oil prices fell on April 2 after the rise in anticipation of the OPEC+ decision to increase production from May, which was perceived by the market as a signal of growing optimism about the prospects for a global economic recovery, Report informs.
The OPEC+ countries agreed to increase oil production in May by 350,000 barrels per day, by the same amount in June, and by another 440,000 barrels per day in July.
In general, for May-July, OPEC+ plans to reach production levels that have been planned since January, and Saudi Arabia will return to the market 1 million barrels of its oil daily, the production of which it voluntarily limited. Despite that the OPEC+ countries have paved the route for increasing oil production for three months, they have reserved the option of a "safety cushion" in the form of a potential decline in production.
The cost of June futures for Brent oil on the London ICE Futures by 9:20 a.m. (GMT +4) on April 2 is $64.65 per barrel, which is $0.21 (0.32 percent) below the price at the close of the previous session. As a result of trading on April 1, these contracts rose in price by $2.12 (3.4 percent) to $64.86 per barrel.
The price of May futures for WTI crude oil on the New York Mercantile Exchange (NYMEX) is $61.24 per barrel, which is $0.21 (0.3 percent) below the level at the close of the previous session. On April 1, the value of these contracts increased by $2.29 (3.9 percent) to $61.45 per barrel.
Phil Flynn, senior market analyst at The Price Futures Group said that he expected producers to raise production levels, but “did not expect that they would announce it now, especially after lowering the demand outlook.”
“While OPEC is acknowledging that the world will need more oil as the US reopens, the increases they are talking about are very modest so if demand bounces back, the market will still be tight,” he said, MarketWatch reports.