Oil slides after three straight gains as Russia downplays more OPEC+ cuts (NYSEARCA:XLE)
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.
As a result, crude futures fell for the first time after three straight daily gains, helped in part by remarks from Saudi Arabia’s top energy official that were taken as a signal that OPEC and its allies could move to further reduce output.
“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.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (USL), (DRIP), (GUSH), (USOI), (NRGU)
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.