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- The outlook for the Oil price remains grim as the OPEC+ has announced that it will speed up the unwinding of 2.2 million bpd output cuts made since September 2022.
- The OPEC+ has announced that it will increase oil production by 960,000 bpd from June.
- US-China trade tensions have dampened the Oil demand outlook.
West Texas Intermediate (WTI), futures on NYMEX, recoups a substantial share of initial losses and rebounds from the intraday low of $55.14 to near $57.30 during European trading hours on Monday. The Oil price is still down almost 1.5% from Friday’s closing price and is expected to remain on the backfoot as the OPEC+ has decided to speed up their objective to phase out production cuts of 2.2 million barrels per day (bpd) announced since September 2022.
The oil cartel decided to unwind oil production cuts gradually by increasing output at a pace of 138,000 bpd each month from April and will reach the 2.2 million bpd mark by September 2026. However, the cartel has accelerated its pace almost three times to 411,000 bpd in May and will increase it to 960,000 in June, Reuters reported. Technically, the Oil price underperforms in an oil-flooded market.
Additionally, elevated uncertainty on the demand outlook in the face of tariffs announced by United States (US) President Donald Trump on the second day of April has also sparked Oil demand concerns.
US President Trump has indicated that he could announce bilateral deals this week, but the trade war with China is expected to last longer, while responding to reporters over the weekend. While increasing hopes of bilateral trade deals by Washington indicate that fears of tariffs proposed by US President Trump have peaked now, the stand-off between the world’s two largest powerhouses will continue to keep investors on their toes.
Market experts have revised their Gross Domestic Product (GDP) forecasts for China in the wake of a trade war with China. Given that China is the largest Oil importer in the world, an economic slowdown in the Asian giant dampens the Oil’s demand outlook.
