StoneX Analyst: OPEC+ Production Surprise Fuels Oil Market Volatility

StoneX market analyst Fawad Razaqzada discusses the factors behind the oil price slump following OPEC+'s decision to start unwinding output cuts earlier than expected.

Key takeaways:

• OPEC+ decision to start unwinding cuts earlier than expected caught the market by surprise.
• Brent, the international benchmark, fell below $80 a barrel for the first time since February.
• Concerns over China's economic recovery and a spike in U.S. stockpiles further contributed to the demand worries

Oil prices experienced a sharp decline Monday, June 3rd following an OPEC+ announcement that it intends to maintain output levels.  However, looking ahead, the group intends to restore production from October, earlier than market expectations. StoneX market analyst Fawad Razaqzada, who provides insights on FOREX.com , pointed out the factors contributing to the slump.

Quoted by Daily Trust, Razaqzada noted that the selling pressure was further pressured by the ISM manufacturing PMI data, which indicated that the small expansion seen in March was a one-off occurrence. The contraction in U.S. manufacturing activity in May for the second consecutive month shifted investor focus from inflation to the risk of dampened demand.

StoneX and FOREX.com analysts are also looking to the upcoming release of U.S. jobs data on Friday, as Federal Reserve officials have emphasized that looser monetary policy will depend on signs of easing tightness in the job market. Meanwhile, the European Central Bank is widely anticipated to begin cutting rates at its meeting on Thursday, potentially marking the first time it has led the U.S. Federal Reserve in easing monetary policy.
As investors navigate the complex interplay of supply decisions, economic indicators, and central bank actions, Razaqzada and the StoneX team of analysts stand ready to provide their insights into the factors shaping oil market dynamics.

Dive Deeper: Fawad Razaqzada analyzes the crude oil, broader commodities, global indices and FX markets regularly. For more insights and analysis from Fawad and his fellow analysts visit FOREX.com

Read the full Daily Trust article here.

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