U.S. crude oil extends losses, falls below $73 per barrel on OPEC+ increasing supply

U.S. crude oil fell nearly 2% on Tuesday, extending a recent losing streak to erase most of its gains for the year after OPEC+ announced plans to increase production starting in October.

U.S. crude has fallen for five consecutive sessions now, with the July contract tumbling 3.6% on Monday in the wake of the OPEC+ meeting last weekend.

Here are today’s energy prices:

• West Texas Intermediate July contract: $72.90 a barrel, down $1.32, or 1.78%. Year to date, U.S. oil has gained 1.73%.
• Brent August contract: $77.14 a barrel, down $1.22 or 1.56%. Year to date, the global benchmark is up 0.12%.
• RBOB Gasoline July contract: $2.30, down 1.12%. Year to date, gasoline futures are up 9.75%.
• Natural Gas July contract: $2.80, up 1.74%. Year to date, natural gas is up 11.38%.

In a surprise move, eight producers led by Saudi Arabia and Russia laid out a detailed plan to gradually phase out 2.2 million bpd of production cuts from October 2024 through September 2025, meaning oil supply will start increasing in the fourth quarter of this year.

“The market reaction is depressing to anyone who produces oil and brings elevated joy for consumers,” Tamas Varga, an analyst at oil broker PVM, said in a note Tuesday.

“If you compare the price levels at the end of last week to yesterday’s settlement prices it is almost obvious that the announcement of gradual reversal of voluntary cuts was chiefly responsible for letting the bearish genie out of the bottle,” Varga said.

The downside should be limited, he said, so long as summer gasoline demand doesn’t disappoint. The recent oil sell-off should also help ease global inflationary pressure, he said.

Some of the decline in oil could also be tied to worries about economic growth. On Monday, a report indicated that the U.S. manufacturing sector was contracting.