On Tuesday, WTI Crude was supported by the market’s growing confidence in OPEC+’s ability to bring the market into balance. Markets closed yesterday with gains near 2% after data showed an uptick in demand as more cars get back on the road. In early trading this morning, the market is giving back some of yesterday’s gains as Russia voiced opposition to extending deep OPEC+ cuts for longer than the original agreement planned.
The original OPEC agreement kept production cuts of 9.7 MMbpd in place through June. Starting in July, production cuts would taper down to 7.7 MMbpd. Though some have hinted at a possible extension of 9.7 MMbpd cuts in July and beyond, Russia believes the market is moving towards balance and the tapering approach is best. Russian Energy Minister Novak announced Russia plans to drill more new wells in 2020-2021 than would be necessary to meet the current 9.7 MMbpd production cuts. This supply news out of Russia is putting downward pressure on markets this morning.
Crude prices are trading lower this morning, partially a reaction to yesterday’s rally and partly driven by Russia’s new stance. WTI Crude is trading at $32.79, a loss of $1.56.
Fuel is down as well in early trading this morning. Diesel is trading at $0.9716, a loss of 1.9 cents. Gasoline is trading at $0.9915, a loss of 5.7 cents.
