Oil slides after three straight gains as Russia downplays more OPEC+ cuts
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Energy (NYSEARCA:XLE) sank to the bottom the S&P sector leaderboard on Thursday, -1.8%, with crude oil falling sharply after Russia downplayed the likelihood of further OPEC+ production cuts at the cartel's June 3-4 meeting.
Russian Deputy Prime Minister Alexander Novak reportedly told the Izvestia newspaper that he did not expect any additional measures would be announced after the group decided in early April to cut output by more than 1M bbl/day.
As a result, crude futures fell for the first time after three straight daily gains that were helped in part by remarks from Saudi Arabia's top energy official. which were taken as a signal that OPEC and its allies could move to further reduce production.
"The Saudis were trying to talk up oil prices and dangle a threat of more production cuts, but it looks like Russia won't be on board for additional cuts," Oanda analyst Edward Moya said.
Front-month Nymex crude (CL1:COM) for July delivery settled -3.4% to $71.83/bbl, and July Brent crude (CO1:COM) closed -2.7% to $76.26/bbl.
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The S&P energy sector is now the weakest performer of the month, -7.5% since the end of April.
Thursday's weaker performers in the group included Devon Energy (DVN) -3.6%, Hess (HES) -3%, Marathon Oil (MRO) -2.8%, EOG Resources (EOG) -2.5%, Diamondback Energy (FANG) -2.5%, Baker Hughes (BKR) -2.5%.
Crude oil will reclaim the $80/bbl level in this year's H2 and could continue rising toward $90 due to a deepening supply deficit caused by OPEC's production cuts and the lack of response from U.S. shale, Bank of America analysts forecast last week.