DTN Oil Update
Oil Futures Rebound Despite OPEC+ Output Increase
HOUSTON (DTN) -- Oil futures rebounded Tuesday morning, recovering from steep losses from the previous trading session, which placed the two main oil benchmarks at their lowest level in four years.
This technical rebound occurred after the NYMEX WTI oil futures contract traded below the $56 mark on Monday, May 5.
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Despite oil futures rallying this morning, downward pressure is expected to persist due to ample global supplies and weak demand fundamentals, coupled with uncertainty caused by the trade war and a potential risk of a U.S. economic recession.
Over the weekend, OPEC+ countries agreed on a 411,000-bpd production increase in June. The hike is part of the planned rollback of some 2.2 million bpd of voluntary adjustments implemented in addition to the group's production curtailment under the Declaration of Cooperation.
Abundant supplies from OPEC+ and weak demand from China, the world's largest importer of oil, due to the trade tensions with the U.S. have contributed to the bearish sentiment among market participants. Additionally, weak U.S. economic data and persistent inflation are also putting pressure on oil prices.
Last week, the Bureau of Economic Analysis reported the U.S. economy contracted by 0.3% in the first quarter of the year, due to an increase in imports from U.S. companies ahead massive trade tariffs the Trump administration has threatened to impose in all countries trading with the United States.
The NYMEX WTI futures contract for June delivery rose by $2.28 to $59.41, while the front-month ICE Brent futures contract increased by $2.16 to $62.39 bbl.
The June ULSD RBOB gasoline futures contract climbed by $0.0457 to $2.0202 gallon, while the front-month RBOB futures contract increased by $0.0486 to $2.0714 gallon.
In contrast, the U.S. Dollar Index fell by 0.430 points to 99.210 against a basket of foreign currencies.
