Oil Prices Slip As OPEC+ Agree To Increase Output

Oil prices slid on Monday, reclaiming earlier gains from the previous session as OPEC+ agreed to gradually increase output between May and July.

Brent crude futures for June dipped 33 cents, or 0.5%, to $64.53 a barrel by 03:06 WAT while U.S. West Texas Intermediate crude for May was at $61.20 a barrel, down 25 cents, or 0.4%.

On Thursday, both contracts edged up more than $2 a barrel as investors viewed the OPEC+ decision as an affirmation of demand-led recovery, and optimism was boosted by U.S. President Joe Biden’s $2 trillion infrastructure spending plan. Markets were closed on Friday because of the Easter holiday.

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The Organization of the Petroleum Exporting Countries (OPEC), Russia, and their allies, known as OPEC+, agreed to ease production curbs by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June, and further 400,000 bpd or so in July.

A sense of caution prevails across the markets amid surging coronavirus cases worldwide, with the renewed lockdowns in France and India tempering the prospects of faster global economic recovery. The concerns also emerge on the oil demand recovery, which weighs negatively on the black gold.

Looking ahead, the covid updates and the US weekly oil supply reports will be closely eyed for fresh direction on oil prices. In the meantime, thin trades and minimal volatility amid Easter Monday could exaggerate the moves.