OPEC+ extends production cuts into 2025

OPEC+ extended substantial oil output cuts into 2025 to stabilize the market amid weak demand growth and rising U.S. production.

By Nadia Elbilassy | @Nadia Elbilassy | 3 June 2024

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  • Asian stocks rose, with Japan’s Nikkei gaining over 1.5%.

  • The dollar index remained near 104.60 after Friday's mixed PCE data, while the euro traded sideways near 1.0846 ahead of the ECB decision.

  • Despite OPEC+ decision, oil prices slipped with Brent crude trading around $81.08, and WTI was near $76, pressured by slow demand growth in China and rising oil stocks in developed economies.

In Asia

Asian stocks edged higher today led by gains in Japan’s Nikkei by over 1.5%. Meanwhile, dollar index remained near 104.60 after Fridays mixed PCE data. The euro was trading sideways near 1.0846 ahead of this week's ECB decision, with markets widely expecting the ECB to cut rates.

Japan's Ministry of Finance released data on Friday confirming that Japanese authorities spent 9.79 trillion yen ($62.2 billion) intervening in the foreign exchange market over the past month to support the yen. These interventions prevented the currency from testing new lows but are unlikely to reverse its longer-term decline. Despite these efforts, the USDJPY pair traded up to 157.46, continuing its uptrend.

In Commodities

On Sunday, OPEC+ agreed to extend most of its substantial oil output cuts into 2025 to stabilize the market amid weak demand growth, high interest rates, and increasing U.S. production. OPEC+ members are currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand.

Brent crude prices have recently hovered around $80 per barrel trading in a tight range and well below the level many OPEC+ members need to balance their budgets. Concerns over slow demand growth in China and rising oil stocks in developed economies have also pressured prices.

Brent was last seen near $81.08 whilst WTI was last seen near $76.

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