In This Article:
Crude oil (CL=F, BZ=F) prices take a dip Monday morning after OPEC+ plans to increase its production by an additional 411,000 barrels per day in June.
Yahoo Finance senior markets reporter Ines Ferré explains more on the action occurring in the global oil market and what is being forecasted about price and supply trends.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Oil prices are falling after OPEC Plus agreed to increase production in June, the second month in a row that the group has boosted oil supply. Yahoo! Finance senior markets reporter, Ines Ferre, has the breakdown here. Hey, Ines.
Hey, Brad. Yeah, and you'll recall that in early April, OPEC Plus had said that it was going to increase production more than what the street had been expecting. That was for the month of May. Now it's doing that for the month of June. And by the way, Wall Street is now anticipating that the oil cartel will do this again for the month of July. So you are seeing oil prices lower, down more than 1% for both WTI and for Brent crude. Look, what OPEC is doing right now is really a reversal of their policy for the last couple of years where they have had production cuts, maintaining a floor on the price of oil. You had a report recently from Reuters saying that Saudi Arabia, the leader of the oil cartel, is basically saying that they are way, they now are, are okay with seeing prices go lower for a longer period of time. Part of this has to do with punishing some of the members for not complying with quotas. Another part analysts are saying is the way they're positioning themselves with the Trump administration, which the Trump administration wants lower oil prices. All of this, also some of this has to do with market share and losing market share over the last couple of years. The cartel doesn't want to keep doing that. Goldman Sachs is now saying that for the rest of the year, they are, they anticipate that Brent crude will be averaging around $60 per barrel for the rest of the year. Also, they're saying that WTI is going to average around $56 per barrel. But just take a look at these losses that we're seeing here, down 21% year to date for WTI and also for Brent down more than 20%. In April, we saw the biggest drop for oil since 2021. Uh the risk of a recession because of the trade war is what's been sending this lower and also on top of that, OPEC Plus saying they're going to boost production, guys.
And Ines, I'd love to get your take on how these moves in the oil market are potentially fueling M&A activity. This morning hearing about a potential deal between Shell and BP, also hearing about Sunoco working to buy Canada's Parkland in a deal worth over $9 billion. Does that have a correlation with the action that you're seeing in crude?
Well, certainly it would uh boost that type of activity. With BP, we know that they have been a target for some time and there have been some players around uh a potential M&A or acquisition of BP. But certainly, look, I've been talking to analysts that have been saying that uh you really can't see oil come going below $60 per barrel for uh the shell, shale production. They don't want to see it going that, that much lower because at some point then there, they, it just doesn't make sense for them to be drilling or new, or drilling new wells.
That, that makes a lot of sense. We had Dan Dicker telling us last week he wouldn't recommend buying a single energy stock right now and maybe that's because of some of the action that you brilliantly laid out for us. Ines, thank you so much for joining us this morning. Appreciate it.
