DTN Oil Update
Oil Futures Dip on OPEC+'s Decision to Increase Output in April
HOUSTON (DTN) -- Oil futures reversed gains recorded this morning to settle lower on Monday after OPEC+ confirmed their decision Monday, March 3, to proceed with a gradual and flexible return of 2.2 million bpd in April.
The NYMEX WTI and ICE Brent futures contracts for May delivery dropped below the $69 mark by falling $0.35 to $68.28 bbl while the front-month ICE Brent fell by $1.44 to $71.37 bbl. The RBOB futures contract for April delivery dropped by $0.0304 to $2.1919 gallon while April ULSD futures contract edged down by $0.0432 to $2.2718 gallon.
The U.S. Dollar Index dropped by 0.99% to 106.57 against a basket of foreign currencies as additional the Trump administration will levy additional trade tariffs on China, Canada and Mexico Tuesday, March 4.
The eight OPEC+ countries -- Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman -- agreed a gradual and flexible increase of 2.2 million bpd its global output starting April 1.
The oil cartel made the announcement in a virtual meeting Monday.
"Accordingly, this gradual increase may be paused or reversed subject to market conditions. This flexibility will allow the group to continue to support oil market stability."
The bearish sentiment in the oil futures market was also supported by a lower-than-expected U.S. ISM Manufacturing Index for February. The Institute of Supply Management reported Monday morning that the Manufacturing PMI was 50.3% in February, below 50.9% in January. The index was lower than the market expectation of 50.6%.
Analysts estimate the drop was driven by the uncertainty surrounding a 10% trade tariff that the Trump administration imposed on China, and 25% on aluminum and steel imports from its main trade partners Canada and Mexico, in February.
Effective Tuesday, March 4, the United States government will impose an additional 10% tariff trade on imported goods from China, 25% on imports from Mexico and 10% on Canadian energy imports.
