WTI extends its losing streak as OPEC+ communicates ease in Oil production cuts

West Texas Intermediate (WTI), futures on NYMEX, fall further to $72.50 in Tuesday’s European session. The Oil price extends its losing streak for the third trading session on Tuesday as the latest supply policy from the OPEC+ meeting on June 2 indicated that the production cuts could be relaxed to some extent later this year.

OPEC members didn’t not full extend the current oil production cut policy. The agency said voluntary cuts of 2.2 million barrels per day (bpd), handled by eight members, out of overall output cut of 5.86 million barrels per day (bpd) will expire by June 2024, unlike the remaining stock cut that will last till September 2024.

Meanwhile, weak United States (US) ISM Manufacturing PMI has also raised concerns over the Oil demand outlook. The US Manufacturing PMI report showed that factory activity contracts for the second straight month in May.

The PMI data was recorded at 48.7, lower than the consensus of 49.8 and the prior reading of 49.2. Apart from that, New Orders Index that reflects the demand outlook fell to 45.4 from the former reading of 49.1, suggesting sluggishness in the economy in the midst of the second quarter due to the Federal Reserve (Fed) maintaining a restrictive monetary policy framework.

Going forward, investors will focus on the US Nonfarm Payrolls (NFP) for May, which will be published on Friday. The US NFP will provide cues about when the Fed will start reducing interest rates. Currently, financial markets expect that the Fed will choose the September meeting as the earliest point to return to policy normalization.