Oil Tumbles On Potential OPEC Output Boost, Multiple Bearish Reports

Meanwhile, trading may be swayed by collapse of Russia/Ukraine peace talks: File Image/Pixabay

Oil on Wednesday extended its losses by another 2 percent as investors tried to digest bearish news on multiple fronts, foremost being the Organization of the Petroleum Exporting Countries (OPEC) said to be considering accelerating output ithis summer.

Three sources familiar with the matter told Reuters that some OPEC members will suggest the cartel accelerate its oil output increase for a second straight month in June, amid tensions over compliance with output quotas.

This contributed to Brent settling down $1.32, or 1.96 percent, at $66.12 per barrel, while West Texas Intermediate settled down $1.40, or 2.2 percent, at $62.27.

More troubling news on Tuesday came in the form of OPEC ally Kazakhstan, whose energy minister issued a statement saying his country was unable to reduce production at its three largest projects.

Although his claim was later redacted, Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, said, "It's kind of hard to put the toothpaste back in the tube on this one……the bigger question is how Saudi Arabia will respond."

Also, while the Wall Street Journal reported that U.S. tariffs on China could be cut by more than half in some cases, treasury secretary Scott Bessent told media that U.S. president Donald Trump is maintaining the tariffs and a full trade deal with the country may take two to three years.

The International Energy Agency contributed to Wednesday's gloom, with executive director Fatih Birol telling Bloomberghis organization sees "slow demand growth in the markets, mainly driven by what is happening in China; if there are no other surprises, we may expect oil prices to see a downward pressure further."

However, he added that a "change in the trade war's context in a positive direction may increase the global economic outlook, and we may see oil demand slightly higher than what we have now."

Sure to influence oil trading in the immediate future was news late Wednesday that talks to end the war between Russia and Ukraine stalled, with president Trump blaming Ukrainian president Volodymyr Zelensky for not accepting a U.S. peace plan.

-30-