Oil prices drop on recession concerns after OPEC+ cuts boost.

Oil prices drop on recession concerns after OPEC+ cuts boost.

The impact of the most recent round of production curbs proposed by OPEC+ members continued to be partially negated as oil prices traded slightly lower early on Tuesday.

On the New York Mercantile Exchange, the price of West Texas Intermediate crude for May delivery CL.1, 0.53% CL00, 0.54% decreased by 8 cents, or 0.1%, to $79.72 per barrel.

Brent crude for June BRN00, 0.29% The international benchmark, BRNM23, 0.25%, decreased 12 cents, or 0.1%, to $83.08 a barrel on ICE Futures Europe.

Back on Nynex, gas for May decreased by 0.4% to $2.80 per gallon while heating oil for May decreased by 1.4% to $2.644 per gallon.

Natural gas prices in May increased by 2.7% to $2.23 per million BTUs (NGK23, 1.29%). 

Market Forces

When members of OPEC+ announced plans to decrease output by 1.16 million barrels per day starting in May until the end of 2023, it dramatically increased oil prices last week. The reduction came after a significant one that was made public in October.

Stephen Innes, managing partner at SPI Asset Management, stated in an email commentary that some market analysts think traders are taking the reduction as a hint that oil producers predict a slowdown in global economic development soon, which is why the early rise in prices has started to fade.

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