DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange finished Monday's session mixed, paring steep overnight losses after reports emerged and concern was raised over oil demand during an OPEC+ Joint Ministerial Monitoring Committee meeting amid a sharp increase of COVID-19 infections in India, Japan, and Latin America, suggesting the 23-nation producer group might consider pausing a planned production increase set for next month when they meet later this week.

The JMMC meeting was held before Wednesday's OPEC+ meeting and follows an April 1 agreement by the expanded producer group to gradually ease production cuts put in place a year earlier over the next three months. The early April decision was a cautious bet on a summer economic rebound to drive oil demand growth even as major oil consuming nations in Asia and Europe continue to battle a resurgent virus.

The coalition led by Saudi Arabia and Russia on April 1 agreed to boost output by 350,000 barrels per day (bpd) in both May and June and increase output by another 450,000 bpd in July. On top of that, Saudi Arabia said it would roll back its unilateral extra 1 million bpd cut, adding 250,000 bpd in May, 350,000 bpd in June and 400,000 bpd in July. If realized, the OPEC+ agreement would add 1.15 million bpd in crude production that joined by the Saudis would lift OPEC+ output by 2.15 million bpd by July.

Fast-forward to Monday, April 26, and the emerging outbreaks in India and Brazil have turned out to be one of the worst public health crises anywhere in the world, with densely populated nations recording the highest number of COVID-19 cases and deaths since the beginning of the global pandemic. Indian Prime Minister Narendra Modi is allowing state and local governments to decide whether they should lockdown their communities, while some of the largest cities, including New Delhi, Bengaluru and Mumbai, have already ordered draconian shutdowns, effectively locking down millions of people at their homes. S&P Global Platts estimates India's fuel demand will be cut by 9% this year.

Speculation has now emerged that the deteriorating outlook in Asia might prompt OPEC+ to pause their planned output hike in May. Most analysts, however, still expect the alliance will go ahead with its decision to ease output restrictions.

In the broader market, stocks on Wall Street finished mixed after U.S. durable goods orders for March missed expectations with a 0.5% gain compared to consensus for a 2% increase. The missed outlook might suggest consumers are gradually slowing purchases of manufactured goods and direct that spending to restaurants and other leisure and hospitality activities following yearlong quarantine restrictions. Economists point out that fiscal relief paired with the widespread vaccinations and prospects of infrastructure spending later this year should further spur business activity.

U.S. economic data continue to show boomlike conditions in the labor market, manufacturing, and service industries. The Atlanta Fed's GDPNow estimate for real gross domestic product growth in the first quarter stands at 8.3%, however some economists suggest that figure likely exceeds 9%. The Bureau of Economic Analysis will release its first estimate for U.S. first quarter GDP at 8:30 a.m. EDT Thursday.

Additionally, the Federal Open Market Committee will hold its two-day policy meeting on Tuesday and Wednesday with central bank officials expected to reaffirm plans to only adjust bond purchases and the target for its benchmark interest rate when the economy achieves "substantial further progress" toward its employment and inflation goals.

At settlement, NYMEX June West Texas Intermediate futures slipped $0.23 to $61.91 barrel (bbl), and ICE June Brent futures declined $0.46 to $65.65 bbl. NYMEX May ULSD futures finished 0.5 cent higher at $1.8785 gallon, while May RBOB futures dropped 1.71 cents to $1.9786 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com