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Oil prices ticked lower at the start of the week on Monday as some market participants weighed OPEC+ decision to extend output cuts well into 2025, with focus also on U.S. economic data.
Combined output next year will total 39.7 million barrels a day, according to a schedule from OPEC+.
UBS said it expects Brent crude oil to rise to $91/bbl over the coming months, and retained a modestly positive outlook for crude prices, expecting larger oil inventory draws over the coming weeks to support prices.
The investment bank says, near-term price could still be volatility due to a different perception of the decision. “Some market participants think that OPEC+ may flood the market, but we disagree with that point. The group still has flexibility and would likely only produce more if it believes those extra barrels will be absorbed by the market,” it added.
JPM Commodities Research meanwhile views the OPEC announcement as market neutral for global crude oil balances and prices in 2024, and anticipates global oil demand to accelerate by 2.5 mbd from the end of April through the end of August.
The brokerage further said, with Brent oil moving at least $10 higher from current levels by September, and the price in the $90s, should keep pressure on the U.S. administration in the run-up to elections but also open the door for the alliance to bring a small proportion of its curbed production in October.
Elsewhere in the energy market, European gas prices saw significant gains amid expectations of a supply shortages and forecasts of aggressive heat waves in Europe later in the summer. Benchmark Dutch futures jumped as much as 7.7% on Monday, the most in a month as flows from Norway slumped, Bloomberg reported. “An unplanned outage means that Norway’s massive Nyhamna gas processing plant is unavailable. At the same time, flows into the UK’s Easington terminal, an entry point for a third of Britain’s total supply, plunged to zero,” the report said.
Turning to metals, gold prices were little changed as markets looked ahead to this week’s batch of jobs data and remarks by Federal Reserve officials. A firmer U.S. dollar also kept prices in check. Bullion clocked fourth-consecutive months of gain.
Recent Commodity Price Movements and A look At Some ETFs
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Commodity ETFs
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