SINGAPORE (Reuters) – Oil prices fell more than $2 a barrel in Asian trade on Monday as OPEC+ is set to further speed up oil output hikes, spurring concerns about more supply coming into a market clouded by an uncertain demand outlook. The June increase will take the total combined hikes for April, May and June to 960,000 bpd, representing a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations. “The May 3 OPEC+ decision to raise production quotas another 411,000 bpd for June adds to the market expectation that the global supply/demand balance is moving to a surplus,” Tim Evans, founder of Evans on Energy said in a note. The group could fully unwind its voluntary cuts by the end of October if members do not improve compliance with their production quotas, OPEC+ sources told Reuters.
OPEC+ sources have said Saudi Arabia is pushing OPEC+ to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas.
The 6-month Brent price spread flipped to a contango of 11 cents a barrel for the first time since December 2023, with oil cheaper now than in future months, reflecting expectations that the market is currently amply supplied.
“We now expect OPEC+ to phase out the additional voluntary adjustments by October 2025 but also expect slightly slower U.S. oil output growth,” Barclays analyst Amarpreet Singh said in a note.
The net impact of the higher OPEC+ output and lower U.S. output
ING analysts led by Warren Patterson said the global oil balance is expected to move deeper into surplus throughout 2025. “The oil market has been dealing with significant demand uncertainty amid tariff risks. This change in OPEC+ policy adds to uncertainty on the supply side,” they added. Meanwhile, tensions flared in the Middle East after Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran for the Tehran-backed Houthi group firing a missile that landed near Israel’s main airport. Iran’s Defence Minister Aziz Nasirzadeh said on Sunday that Tehran would strike back if the United States or Israel attacked.
NN: I want to be very clear here, as I’ve been saying all along. The market low Of $58.15 Brent put in on April 9th will and has held. It was tested today. With a low in the overnights of $58.60. The market has since reversed and its trading around $60.00. This is low volume trading with labor day in the UK banks and trading closed. I’m going to watch the next couple days for a possible quick and dirty test of the low and a possibility of skid marks into the high $57.00 area where there are a lot of juicer stops. We’ve doubled down on our buying in the cash machine both Friday and today anticipating a very significant bottom.
Its noteworthy that OPEC+ decision on Saturday to increase output was not a surprise to the market. It was well telegraphed and designed to punish over producers namely Iraq and Kazakhstan for producing above their quotas.
On a further note there is no peace in the valley. America, despite daily pounding the shit out of of Houthi positions in Yemen have been unable to stop the rocket attacks on Israel. Yesterday four rockets penetrated Israeli airspace and for the first time scored a direct hit on the international Airport. Panicking passenger’s and causing massive flight cancellations.
Israel cabinet approved an invasion into Gaza. Calling up 30,000 combat troops which are amassing at the border with Gaza. An invasion has been set in the next two weeks to take back full control Gaza which they should have done years ago.
A peaceful nuclear deal with Iran is never going to happen. Sooner or later their nuclear industry will be bombed into Oblivion
In closing, sophisticated traders, (not the algo fagots or candlestick assholes who are the shortest they’ve ever been) that buy the real barrels not paper barrels are buying the shit out of oil and going very long. They are scooping up bargain basement priced oil with both hands, including the Chinese
Again I repeat a very significant bottom has been put in. The old lows have held and I expect a major rally in the coming weeks. So I just urge you to buy Bargain Basement priced barrels of oil while you still can