Oil Prices Slide as Saudi Arabia Cuts Production.- The oil markets experienced a decline in prices on Tuesday, prompted by the recent announcement that Saudi Arabia intends to reduce oil production by an additional one million barrels per day in July.
While the news initially provided a boost to oil prices on Monday, they have since retreated.
During midday trading on Tuesday, Brent crude, the international benchmark, recorded a 0.5% loss, settling at $76.34 per barrel. Similarly, West Texas Intermediate, the U.S. standard, witnessed a 0.3% decline, reaching $71.95 per barrel.
Oil stocks displayed a mixed performance, with Chevron down 0.3%, Exxon Mobil rising 0.5%, and ConocoPhillips falling 0.4%.
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According to Tom Essaye, the president of Sevens Report Research, while the production cuts theoretically should create a supply deficit in the physical markets and be bullish, concerns regarding the expected rise in non-OPEC+ production next year and ongoing worries about consumer demand in light of the looming threat of a recession in the second half of 2023 have offset the positive impact of the OPEC+ news.
As we look ahead, these latter two factors are expected to constrain the oil market in the coming months and limit any potential rally at the resistance level of $80 a barrel in 2023, Essaye noted.
Despite the efforts to curtail production, the anticipated surge in non-OPEC+ output and uncertainties surrounding consumer demand are exerting downward pressure on oil prices. These dynamics will likely influence the market in the near term and restrain significant upward movements.
Investors and analysts will continue to closely monitor developments in the oil industry as they navigate the complex interplay between supply, demand, and geopolitical factors, which collectively shape the trajectory of oil prices.
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