DTN Oil Update
Oil Drops as OPEC+ Commits to Another 411k-bpd Output Hike
VIENNA (DTN) -- Oil futures fell Monday morning after eight OPEC+ countries over the weekend 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.
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NYMEX-traded WTI for June delivery was down $0.89 bbl to trade near $57.40 bbl, and ICE Brent for July delivery fell $0.81 bbl to $60.48 bbl.
June RBOB gasoline futures declined $0.0079 to $2.0120 gallon, while the front-month ULSD futures contract slid $0.0131to $1.9801 gallon.
The U.S. Dollar Index softened by 0.490 points to 99.350.
The third consecutive monthly hike translates to close to 1 million bpd more global supply in June than three months earlier, far outpacing demand growth at a time when the latter is set to be stunted by the ongoing trade war. In a joint press release, however, Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman cited "current healthy market fundamentals" and low inventories in support of the production increase.
Production discipline has led to OPEC sitting on plenty of spare production capacity, some of which can immediately supply additional volumes to the market. The U.S. Energy Information Administration in its April short-term energy outlook pegged OPEC spare production capacity at 4.59 million bpd in March and 4.52 million bpd in April.