Oil prices fall again due to expectations from OPEC+
4 June 2025 08:27
Oil prices declined during Asian trading on Wednesday as the market reacted to the expected increase in production from OPEC countries and growing trade tensions that threaten global economic growth. At the same time, fears of disruptions in oil supplies from Canada have to some extent restrained the fall in quotations, "Komersant Ukrainian" reports citing Reuters.
According to OilPrice.com, futures for Brent crude oil fell by 24 cents, or 0.37%, to $65.39 per barrel as of 7:30 a.m. Kyiv time. US WTI fell by 24 cents, or 0.38%, to $63.17 per barrel.
The day before, both benchmarks rose by about 2% and reached a two-week high. The growth was spurred by fears of oil supply disruptions due to large-scale wildfires in Canada, as well as expectations that Iran would reject the US proposal for a nuclear deal, a key element for lifting sanctions on one of the largest oil-producing regions.
“Despite concerns about supplies from Canada and the stagnation in the negotiations between Iran and the United States, the oil market is finding it difficult to maintain its positive momentum,”
– said Tsuyoshi Ueno, senior economist at NLI Research Institute. He added that the prospects for production growth from OPEC limit the potential for further price increases.
Factor: US vs. China
In addition, investor sentiment remains restrained due to uncertainty in the US-China trade relationship. Hopes for progress in the negotiations were overshadowed by profit-taking and general concerns about the economic impact of the new tariffs.
White House spokeswoman Carolyn Leavitt said on Monday that US President Donald Trump and Chinese leader Xi Jinping may have a phone call this week. This comes a few days after Trump accused China of violating agreements to lift tariffs and trade restrictions.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) on Tuesday lowered its forecast for global economic growth, pointing to the negative effects of the US-initiated trade war, including on the US economy itself.
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Factor: forest fires in Canada
Against this backdrop, markets are still closely monitoring the situation with the forest fires in Canada, which have been going on since May. Despite the temporary easing of the fires due to rainy weather, the risk to supplies remains.
“This relief, however, may be short-lived given the forecasts for drier and warmer weather later in the week,”
– ING analysts said in a note to clients.
Some analysts suggest that the reduction in supply from Canada could offset more than half of the increase in volumes planned by OPEC next month.
“Estimates suggest that approximately 350,000 barrels per day have been lost or shut down due to the fires. This is more than three quarters of the volumes that OPEC agreed to add to the market in July,”
– said Ole Hvalby, SEB analyst.
Outlook
Analysts are closely monitoring the impact of OPEC’s production increase and the situation with the fires in Canada on the overall oil supply.
“The current situation… is the result of low inventory levels that have been in place since the beginning of the year. At the same time, everything points to expectations of oversupply in the future, due to the planned increase in production by OPEC and the overall slowdown in the global economy,”
– Bank of America analysts said in a research note to clients.
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