Oil Prices Tumble to $74 As OPEC Scraps Voluntary Cuts

Oil prices have been on a bullish trend since December, with MAs acting as support. But, they have broken below as global demand remains low, while OPEC decided to phase out the voluntary production quotas, which means higher Oil output from member countries.

OPEC+ Production Cuts Agreements:

1. Extension of Existing Cuts:
   • 3.66 million barrels per day (bpd) cut: Initially set to expire at the end of 2024, these cuts will now extend by a year until the end of 2025.
   • 2.2 million bpd cut: Initially set to expire at the end of June 2024, these cuts will be prolonged by three months until the end of September 2024.
2. Gradual Phase-Out:
   • The 2.2 million bpd cuts will be gradually phased out over the course of a year from October 2024 to September 2025.

Crude Oil Chart Daily – The 100 SMA Is Under Attack Now

The prevailing risk-off sentiment in the broader market has contributed to downward pressure on oil prices. This sentiment reflects concerns about macroeconomic factors and geopolitical tensions, including peace discussions in Gaza, which could potentially reduce tensions in the Middle East.

Following the OPEC+ meeting, members agreed to begin phasing out voluntary output curbs starting in October. This decision was made by a coalition of eight OPEC+ nations, led by Saudi Arabia and Russia. The phased approach will span over a 12-month period, gradually increasing oil production

US WTI crude experienced a significant decline of over $4, or approximately 5%, in response to the OPEC+ meeting outcome and broader market sentiment. UK Brent crude oil prices also dipped below $80 a barrel for the first time since February. The downward movement in Brent crude prices reflects the combined influence of the OPEC+ decision and market sentiment.

The market’s reaction to the OPEC+ decision and the broader risk-off sentiment underscores the sensitivity of oil prices to geopolitical developments and supply dynamics. Investors and traders closely monitor OPEC+ meetings and geopolitical events for potential impacts on oil supply and demand. The phased approach to increasing oil production by OPEC+ nations could lead to a gradual easing of supply constraints in the market, which is why Oil is falling today. However, continued geopolitical tensions and uncertainties surrounding global economic recovery may continue to influence oil prices in the near term. But at the moment the peace talks in Gaza are also going against Oil bulls.

WTI Live Chart