Oil prices faltered on Tuesday, just two days after Saudi Arabia announced voluntary production cuts as investors focused on macro data and demand.
Around 09:55 GMT (11:55 a.m. in Paris), a barrel of Brent from the North Sea, for delivery in August, lost 1.59% to 75.49 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery in July, dropped 1.64% to 70.97 dollars.
“Macroeconomic data (remain) the main driver” of oil demand in the eyes of investors, explains Stephen Innes, of SPI AM.
The services activity index in the United States published on Monday disappointed, barely progressing in May, dragging oil prices down.
This drop in prices comes despite Saudi Arabia’s decision to make a new production cut from July, an announcement made on Sunday after a meeting in Vienna of OPEC + (the thirteen members of the Organization of the Petroleum Exporting Countries and their ten allies led by Russia).
The gains linked to the announcement have thus already been wiped out, for both WTI and Brent.
“We saw a similar price reaction in October last year, when a 2 million barrel per day cut was announced, and in early April,” when OPEC+ members decided to withdraw an additional 1.66 million barrels per day from the market, recalls Tamas Varga, of PVM Energy.
He thus evokes “brief” price increases, “well-established inflationary pressure” and possible “further interest rate hikes” by the major central banks that always end up weighing on economic growth, and therefore demand.
Saudi Arabia’s announcement, however, gives it “considerable flexibility”, notes Stephen Innes.
“If demand disappoints, Saudi Arabia could extend its cutback by 1 million barrels per day, which would keep global stocks low,” he said.
On the other hand, in the event of global demand supported by China’s economic recovery and the easing of recession fears, Saudi Arabia could then afford “to cancel its temporary reduction without damaging its credibility”, according to Mr. Innes.
emb/ve/ob
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