Crude Oil (CL) declined 1.8% on Monday morning after OPEC+ agreed to gradually ease output cuts between May and July 2021. In addition, Brent Oil (EB) also dropped 1.5% and Heating Oil (HO) sank 1.6%.
The Organization of the Petroleum Exporting Countries (OPEC+), including Russia and allied nations, announced on Thursday the decision to ease Oil production cuts, as the Biden administration instructed Saudi Arabia to ensure energy remains affordable despite global demand concerns. This instruction comes as European nations continue in various states of lockdown, and Japan considers expanding emergency measures to abate rising corona infection rates.
May and June are predicted to bring an additional production of 350,000 barrels each day, increasing to 450,000 barrels per day in July. Saudi Arabia has also stated it will phase out additional voluntary cuts by July, securing production of an additional one million barrels per day.
Energy Commodities Take a Dip
Oil wasn’t the only commodity to decline this morning; the OPEC+ decision to ease production cuts could have provoked a reaction in other commodities.
Oil and other commodity prices may also be affected by renewed travel restrictions in Europe, in addition to delays which may have occurred from the blocked shipping lanes in the Suez Canal in the last week of March 2021.
With Oil production set to increase between May and July, traders may keep an eye on Oil prices and energy commodities for market movements. It remains to be seen how these energy commodities will react in the coming months.