Energy prices might still be going strong, but due to concerns about the recession, several long positions in the market suffered double-digit losses in June. This put an end to the spectacular month-over-month rises in oil prices, at least temporarily.
With the U.S. standard, the West Texas Intermediate, closing with a 5% rise and the global benchmark Brent up roughly 1%, crude prices were still expected to close the second quarter up.
However, they were significantly down for the month of June, with Brent down more than 11% and WTI down around 8%.
Since Brent and WTI both lost 16% and 20% respectively in November, it was the first and largest monthly decline.
Crude Oil Prices Record 11% Drop In June On Fears Of Recession
Brent’s most active contract was trading at $110 per barrel on Thursday. For Brent’s busiest month last month, the closing was $122.84; for March, it was $107.91.
WTI for August delivery, on the other hand, settled at $105.76 a barrel, down from its closing prices of $114.67 in May and $100.28 in March.
The cartel OPEC+ and its allies reaffirmed a previously-agreed production of about 650,000 barrels per day for July and August up more than 50% from June causing Thursday’s dip alone of nearly 4 percent to weigh hard on the two oil benchmarks.
The alliance of 23 oil producers, led by Saudi Arabia and backed by Russia, stated that the increased production is required to meet the surge in crude demand anticipated for the upcoming two months, which are anticipated to see excessively high road and air travel from people making up for two years of relative summertime inactivity caused by the coronavirus pandemic.
However, the concern over a probable recession seemed to be more pressing than OPEC’s expectations for demand.
Recession is quite likely to occur this year or the following year, and investors are coming to terms with it as well.
Since China reopened and the OPEC+ deficit widened in recent weeks, there has been more two-way price action, which has prevented any unsustainable increases in the price of petroleum.