Oil prices have fallen with the opening of the financial market today, Monday, erasing last week’s gains which were supported by OPEC+’s decision to gradually increase oil prices in May.
Brent crude for June delivery fell 0.9% to $64.25 a barrel. West Texas Intermediate crude for May delivery fell 53 cents reaching $60.92 a barrel.
Oil prices rose last Thursday to more than two dollars, after the decision of OPEC+ to increase production due to optimism about the economy.
OPEC + agreed to ease production restrictions by 350,000 barrels per day in May, another 350,000 barrels per day in June and about 400,000 barrels per day in July.
Goldman Sachs analysts said the decision indicated a cautious and managed increased by OPEC+, allowing the market to remain free of supplies.
The analysts expect a strong demand recovery for oil this summer, which requires an additional two million barrels per day of OPEC+ production from July to October.
Prior to OPEC+’s meeting on Thursday, the alliance was expected to maintain its cautious stance and reduce production extensions would during at least May and June. However, the results of the meeting were contrary to expectations.
Member states expressed during the meeting their increasing confidence in the recovery of the global economy, despite the spread of the new strain of the Coronavirus, and decided to increase production.
However, Saudi Arabia and its allies have shown that they are more convinced now that demand for fuel is receiving strong support, after unrest during the past year.
As countries like the United States rapidly expanding their vaccination programs, there are growing signs of a recovery in the oil market, according to OPEC+ members.
Last week, US refineries processed the largest amount of crude oil since the start of the pandemic, as it prepares to meet the demand for fuel in the transportation sector.
Despite the weak oil consumption in Europe, after France, Germany and Italy extended closures, demand indicators from China are still strong.