Oil Prices Slip Despite OPEC Production Cut Extension

 

Oil Prices Slip Despite OPEC Production Cut Extension

Oil prices fell on Friday, despite OPEC's decision to extend its production cuts into 2025, as concerns over the global economic outlook and rising supply from non-OPEC producers weighed on the market.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, announced on Thursday that they would extend their production cuts of 1.2 million barrels per day (mb/d) until the end of 2025. The move was seen as a bid to support prices and balance the market.

However, oil prices fell by around 2% on Friday, with Brent crude trading at around $72.50 per barrel and WTI crude at around $67.50 per barrel. The price drop was driven by concerns over the global economic outlook, with worries over inflation, interest rates, and recession weighing on the market.

"The market is still grappling with concerns over the global economy, and that's been weighing on oil prices," said Robert Briggs, an energy analyst at S&P Global Platts. "The extension of OPEC's production cuts was seen as a positive, but it's not enough to overcome the broader economic concerns."

Rising supply from non-OPEC producers, including the United States, also contributed to the price drop. The US Energy Information Administration (EIA) reported earlier in the week that US oil production had risen to 12.2 million barrels per day in May, up from 11.9 million barrels per day in April.

"The US shale industry is still producing at record levels, and that's putting pressure on oil prices," said Stephen Schork, president of the Schork Report. "The extension of OPEC's production cuts is not enough to offset the increased supply from non-OPEC producers."

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Leave a comment below and let us know your thoughts on oil prices. Do you think OPEC's production cut extension will be enough to support prices? How do you think the global economic outlook will impact oil prices in the coming months?

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Conclusion

Oil prices fell on Friday despite OPEC's decision to extend its production cuts into 2025, as concerns over the global economic outlook and rising supply from non-OPEC producers weighed on the market. The move was seen as a bid to support prices and balance the market, but it was not enough to overcome the broader economic concerns. The price drop is likely to continue unless there are signs of a sustained recovery in global economic growth.