WTI drops below $74.00 as OPEC+ plans to ease Oil production cuts

West Texas Intermediate (WTI) Oil price continues to decline for the fifth consecutive day, trading around $73.90 per barrel during the Asian session on Tuesday. This drop in crude Oil prices is attributed to the Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, announcing a gradual plan to ease some of their Oil production cuts.

OPEC+ plans to phase out voluntary production cuts of 2.2 million barrels per day (bpd) over the next year, starting in October. By December, over 500,000 bpd are expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025.

According to a Reuters report, the United States is purchasing an additional 3 million barrels of Oil for the country's Strategic Petroleum Reserve (SPR), as announced by the Department of Energy on Monday. This move is part of a gradual replenishment effort following the largest sale ever in 2022. US President Joe Biden had ordered the sale of 180 million barrels over six months in 2022 to control fuel prices after Russia's invasion of Ukraine.

The latest US Personal Consumption Expenditure (PCE) data indicated that price pressures eased in April. Despite this, the report did not prompt a rate cut from the Federal Reserve (Fed), suggesting that the central bank may need more time to achieve its inflation goals. The higher interest rates are negatively impacting the US economic outlook and dampening the demand for Oil.