Brent Falls Below $80 For First Time Since February

The nearest contract for Brent futures dropped 3.59 percent to $78.19 at the time of writing, while the American WTI contract was down 3.43 percent at $74.26. it is worth mentioning that Brent crude oil prices fell to below $80 a barrel on Monday for the first time since February, after an OPEC+ meeting in which members agreed that countries could starting phasing out voluntary output cuts starting in October.

Oil prices dropped by over $2 per barrel on Monday to reach multi-month lows, fueled by investor concerns regarding the demand trajectory. The complex OPEC+ output decision signaled a willingness among member countries to increase crude exports.

On Sunday, OPEC+ extended the majority of its significant oil output reductions until 2025, while allowing gradual easing of voluntary cuts among eight core members starting from October. Additionally, the group set a new output objective for the United Arab Emirates, which had been advocating for higher quotas.

Brent crude futures dropped $2.76, or 3.4 per cent, to reach $78.35 per barrel by 11:37 a.m. ET (1539 GMT). US West Texas Intermediate crude futures also declined by $2.80, or 3.6 per cent, settling at $74.19 per barrel. These figures mark the lowest point for both contracts since early February.

Crude oil prices experienced significant volatility over the past week, dropping ahead of the upcoming OPEC+ meeting and a surprising decline in US gasoline demand. According to the US Energy Information Administration (EIA), US crude oil inventories fell by 4.2 million barrels last week, surpassing the expected decline of 1.6 million barrels.

Despite the peak summer driving season, gasoline demand unexpectedly decreased by about 2% from the previous week to 9.15 million barrels per day. This drop in demand led to US gasoline futures hitting three-month lows.

What’s weighing on crude oil prices?

Indications of a slowdown in demand expansion have put pressure on oil prices, with attention now turning to the data regarding US fuel consumption. The US Energy Information Administration is set to unveil its projections for oil inventories and fuel usage on Wednesday, shedding light on the extent of gasoline consumption over the Memorial Day weekend, marking the kickoff of the US driving season.

A recovery in the US dollar index contributed to the decrease in oil prices. However, easing inflation in the US and a potential rise in demand during the peak summer driving season could provide support for oil prices at lower levels. We expect crude oil prices to remain volatile in today’s session. Crude oil has support at $76.60–76.10 and resistance at $77.90-78.70 in today’s session.

Brent crude oil prices fell to below $80 a barrel on Monday for the first time since February, after an OPEC+ meeting in which members agreed that countries could starting phasing out voluntary output cuts starting in October.

The nearest contract for Brent futures dropped 2.2 percent to $79.35 at around 1400 GMT before recovering to around $80.32, while the American WTI contract was down 1.0 percent at $76.19.

Technical Outlook

WTI oil tests new lows as traders focus on OPEC+ decision to phase out voluntary production cuts starting in October. OPEC+ noted that the decision would be subject to market conditions at that time.

In case WTI oil settles below the support at $74.50 – $75.50, it will head towards the next support level at $68.00 – $69.00.

Brent oil is losing ground amid a broad sell-off in the oil markets. Traders worry that OPEC+ would boost production at a time when demand would be weak. A move below the $78.00 level will push Brent oil towards the nearest support level, which is located in the $76.00 – $77.00 range.