American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Business

Crude oil faces extended downside risks amid ample supply through year-end

by admin June 4, 2025
June 4, 2025
Crude oil faces extended downside risks amid ample supply through year-end

There are downside risks for oil in the coming months, particularly from higher supply. However, prices could rise again from the beginning of 2026, according to experts. 

Eight OPEC+ nations implementing voluntary output reductions agreed over the weekend to boost oil production by 411,000 barrels daily in July.

This marks the third consecutive monthly output increase.

Ahead of the meeting, speculation about an even larger output surge drove oil prices up considerably, recovering losses from the prior week’s close. 

Rumors had circulated regarding a potential major production increase, leading to this price rebound.

There were reportedly differing opinions at the virtual OPEC+ meeting over the weekend.

Saudi Arabia advocated for a larger output increase, in contrast to Russia and two other nations who preferred to maintain current production levels.

OPEC’s compromise

The decision reached was therefore a compromise.

“With the increase in supply that has now been approved, more than half of the voluntary production cuts of 2.2 million barrels per day have already been reversed,” Carsten Fritsch, commodity analyst at Commerzbank AG, said. 

“However, the justification for the production increase (stable economic outlook, healthy market fundamentals) given in the press release, which was identical to the previous month, does not sound very convincing.”

Indeed, this likely focuses mainly on penalising significant quota exceeding nations, like Kazakhstan, according to Fritsch.

The stated increase in production volume is improbable. This is due to both other nations, like Iraq and the UAE, already exceeding their agreed-upon limits, and this underlying reason.

Fritsch added:

OPEC+ also apparently does not want to lose any more market share to shale oil producers in the US and is also fulfilling the demand of US President Trump, who had called for OPEC+ to increase oil production. 

Supply

Presently, the oil market appears capable of handling the increased supply.

According to Rystad Energy, the summer months from June to August result in higher demand for oil. These three months could be ideal for production increases from OPEC. 

“However, a considerable oversupply could loom in the autumn if OPEC+ increases oil production at the same rate in the coming months,” Fritsch noted.

Inventory levels are currently low in the US, indicating a supply shortage. This shortage will probably be a significant factor too, according to Commerzbank.

Amid tariff-related market volatility sparked by US President Donald Trump’s announcements, Brent oil prices have fluctuated since April. 

After experiencing sharp declines in early April and May, the price of Brent oil has stabilised, trading within the $63 to $67 per barrel range in recent weeks.

From Friday’s close to Monday’s high, crude oil gained nearly 5% before pulling back a touch. 

Supply in 2026

Next year’s oil market may become tighter, with OPEC+ unlikely to increase supply.

Production cuts other than the voluntary reductions of 2.2 million barrels per day by the eight nations, agreed upon by OPEC+ will remain in place through the end of 2026.

Lower prices may lead to a stagnation, or even a potential decline, in US oil supply while other factors are occurring.

Last week saw US drilling activity dip to its lowest point since November 2021, as reported by oil service provider Baker Hughes.

Demand for oil is also likely to recover from tariff-related conflicts next year, which could absorb supply increases, if any. 

Prices

“There are therefore downside risks for the oil price in the coming months,” Fritsch said. 

After that, however, prices could rise again.

At the time of writing, the price of West Texas Intermediate crude oil was at $63.13 per barrel, down 0.4%. The most-active contract of Brent crude on the Intercontinental Exchange was at $65.36 a barrel, also down 0.4% from the previous close. 

Oil prices received upward momentum due to Alberta’s wildfires. This occurred while the market simultaneously assessed the newly publicized supply increase from OPEC+ for July. 

“There continue to be clear signs of tightness in the spot oil market as we move closer towards the Northern hemisphere summer,” analysts at ING Group said in a note. 

The recent strengthening of Brent and WTI prompt timespreads is notable, especially as trading remains in a significant backwardation state.

However, for others the oil price outlook remains uncertain. 

“The outlook is uncertain. Front-month WTI has traded in a relatively tight range over the past three weeks, with support around $60, and resistance near $63 on a closing basis,” said David Morrison, senior market analyst at Trade Nation. 

The daily MACD is also tracking sideways at neutral levels. It looks as if crude requires a catalyst to get it moving once again.

The post Crude oil faces extended downside risks amid ample supply through year-end appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
China’s export curbs on critical minerals raise alarms for global automakers
next post
DocuSign stock price forecast ahead of earnings: buy or sell?

Related Posts

Zomato to Eternal, Google to Alphabet, Facebook to...

February 7, 2025

Why are Zomato, Biocon and ONGC shares buzzing...

January 7, 2025

Europe markets open: Stoxx 600 drops 0.5%; Volkswagen...

July 25, 2025

LVMH drops 8% on sales miss as geopolitics...

April 15, 2025

Microsoft’s new AI chip delayed to 2026: report

June 28, 2025

Why Google and Microsoft are turning to nuclear...

October 16, 2024

Will the Adobe stock price rise or fall...

June 8, 2025

Coinbase becomes Ethereum’s largest node operator, controlling 11.42%...

March 20, 2025

Standard Chartered to repurchase $1.5B in shares after...

February 21, 2025

BNB Chain revenue hits 2025 high, but BNB...

July 2, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • How Donald Trump’s immigration crackdown may tank the labor market

      August 4, 2025
    • Trump’s tariff threat looms over India’s Russian oil deals

      August 4, 2025
    • Trump moves nuclear submarines near Russia: what triggered the move and what’s ahead

      August 3, 2025
    • BOE rate cuts offer little relief as UK households face mounting financial strain

      August 3, 2025
    • Retail investors shift focus to Europe as US valuations stretch

      August 3, 2025

    Categories

    • Business (3,583)
    • Investing (2,703)
    • Latest News (2,031)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved