Oil Hovers Near $75 amid OPEC+ Supply Increase Considerations
Brent crude futures traded sideways on Monday, with modest gains and losses. OPEC+ is reportedly contemplating postponing monthly supply increases scheduled to begin in April.
Supply Concerns and Delegations Split
A delegate, requesting anonymity, stated that the group is divided on how to proceed due to the fragility of global oil markets. Discussions continue, but a decision is pending.
Meanwhile, Kazakhstan's primary oil export pipeline has reduced operations following a drone attack. The pipeline was expected to transport approximately 1.6 million barrels per day this month and next.
Bearish Factors Emerge
Despite supply concerns, prices remained subdued on Monday. Iraq's oil minister indicated that exports from Kurdistan could resume within a week, potentially adding over 300,000 barrels daily.
Furthermore, West Texas Intermediate's nearest futures have entered contango, a bearish structure suggesting oversupply. Refinery maintenance could also lead to inventory builds at key storage hubs.
US Influence and Market Uncertainty
Traders are monitoring developments in President Trump's second term, particularly regarding his efforts to end the war in Ukraine. This could potentially alleviate sanctions on Russia's oil industry, improving supply flows.
Market Participants Weigh In
Bloomberg strategists argue that OPEC+ is unlikely to comply with President Trump's calls for lower oil prices. Brent at $74 per barrel is below the budgetary requirements of many producers, and further declines pose risks to their economies.
Trading activity may be lower on Monday due to the Presidents' Day holiday in the US.