Oil futures settled Tuesday at their lowest in nearly four weeks, with U.S. prices ending below $70 a barrel, as traders waited on the outcome of a meeting of the Organization of the Petroleum Exporting Countries and its allies that is set for this coming weekend.
Price action
-
West Texas Intermediate crude for July delivery
CL00,
-4.00% CLN23,
-4.00%
declined by $3.21, or 4.4%, to settle at $69.46 per barrel on the New York Mercantile Exchange. -
July Brent crude
BRN00,
+0.43% BRNN23,
+0.48% ,
the global benchmark, fell by $3.53 or 4.6%, to $73.54 per barrel on ICE Futures Europe. Brent and WTI crude futures marked their lowest settlements since May 4, according to Dow Jones Market Data. -
Back on Nymex, June gasoline
RBM23,
-3.40%
declined by 4% to $2.60 a gallon, while June heating oil
HOM23,
-3.40%
fell by 3.7% to $2.28 a gallon. -
July natural gas
NGN23,
-4.59%
fell by 3.7% to $2.33 per million British thermal units.
Market drivers
Oil prices have fallen back since the start of 2023 as expectations for a slowdown in global economic growth have weighed on prices of energy commodities.
Production cuts announced by OPEC and its allies have had limited impact on prices, but traders will be watching closely ahead of the next meeting of the cartel of oil exporters, set for this coming weekend.
The OPEC+ meeting on June 4 should be “pivotal,” said Louis Navellier, chief investment officer at Navellier Calculated Investing, in a written version of his Tuesday market commentary podcast.
He pointed out that tensions have been rising between Russia and Saudi Arabia, with Russia “pumping increasing volumes of cheap heavy crude oil onto world markets, which has been undermining Saudi Arabia’s efforts to boost prices.”
Traders are on guard after a top Saudi official said last week that short sellers had better “watch out,” with some analysts seeing the warning as a suggestion that OPEC+ may decide to reduce production at its meeting Sunday.
See: Top Saudi official says oil speculators had better ‘watch out’
While Saudi Arabia’s energy minister has suggested the need for further cuts in output, Russia’s prime minister “has stated there was no need for further cuts,” wrote Victoria Dircksen, commodity analyst at Schneider Electric, in a daily market update.
Still, “should demand manage to maintain its current strength and capitalize on the customary seasonal surge in travel during the summer, there is a possibility of it aligning with more OPEC+ production cuts and the United States’ strategic reserve repurchasing plans,” she said. “This convergence could significantly narrow the gap between supply and demand, potentially leading to a sequence of inventory declines that would provide price support.”
Natural-gas futures, meanwhile, declined after the National Oceanic and Atmospheric Administration’s 8- to 14-day temperature outlook showed that cooling demand will likely remain weak through June 12, with most of the lower 48 states expected to see below-average to near normal temperatures, said Dircksen.
Read: Natural-gas prices have dropped by nearly half this year, despite output risks and higher demand prospects
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