Summary:
Oil prices fell over \$2 in early Asian trade Monday as OPEC+ plans faster output hikes despite weak signs of strong market fundamentals.
Oil prices fell more than $2 a barrel in early Asian trade on Monday as OPEC+ is set to further speed up oil output hikes despite little evidence to support the assertion of healthy market fundamentals.
Both contracts touched their lowest since 9 April. The group could fully unwind its voluntary cuts by the end of October if members do not improve compliance with their production quotas, OPEC+ source said.
For the first four months of 2025 Asia's seaborne imports are still down 280,000 bpd from the same period in 2024 and there is an increasing likelihood that the trade war launched by Trump will start curbing oil demand.
The decision may be aimed to please Trump calling for cheaper energy, and to limit oil output in other major producers, such as the us and Brazil, given their higher cost of production.
Barclays lowered its Brent forecast by $4 to $66 a barrel for 2025 and by $2 to $60 a barrel for 2026. Goldman Sachs sees prices fall into the $40s in 2026, and below $40 in an unlikely extreme scenario.
Meanwhile, tensions flared in the Middle East after Israeli PM Benjamin Netanyahu vowed to retaliate against Iran for the Tehran-backed Houthi group firing a missile that landed near Israel's main airport.
Brent crude is on track to retest the bottom it hit last month at $58.20. AS RSI approaches 30, an imminent rally is on the cards around that level though it still looks weak on a longer horizon.
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