Crude Has Recovered From Early Losses Following OPEC Decision

Oil prices started the APAC session lower following OPEC’s decision to reduce the amount output is cut from October. They then rose but are now off those highs to be moderately lower on the day. Brent is down 0.1% to $81.03/bbl after rising to $81.65 and a low of $80.55 early in trading. WTI is around $76.93/bbl after a high of $77.52 and a low of $76.39. The USD index is down 0.1%.

• OPEC cuts will be extended into 2025 but will then be reduced over the year from October, which was earlier than many expected. The June agreement seems a compromise as Saudi Arabia wants higher prices to fund its economic plans while other producers want to pump more as many have increased capacity. Bloomberg estimates that there could be an additional 750kbd by January.
• There has been a mixed response to the group’s decision with Goldman Sachs seeing an increase in stocks putting pressure on prices but RBC and UBS continuing to believe that OPEC will direct the market, according to Bloomberg. June’s deal is likely structured to keep the group united.
• Later US May manufacturing ISM/PMIs and European manufacturing PMIs print. US May payrolls on Friday are the next focus for oil markets.