The price of Brent crude is down 3%, falling below $80 for the first time since February

Brent crude futures were down 49 cents, or 0.63%, at $77.87 a barrel. This marked the first time Brent had closed below $80 since February 7, after a month-long decline of more than 3%.

Oil prices continued to fall from yesterday, hitting a four-month low. Concerns about year-end supply growth, along with cautious demand forecasts from major U.S. consumers, weighed on investor sentiment.

U.S. West Texas Intermediate crude futures were down 51 cents, or 0.51 percent, at $73.71. That came after futures settled near a four-month low on Monday after falling 3.6 percent.

Current prices are still in the region of Nigeria’s benchmark crude oil price of $78 in the 2024 budget.

OPEC+ decision over the weekend

Over the weekend, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, known as OPEC+, reached an agreement to extend most oil production cuts until 2025. However, they allowed voluntary cuts from eight members to be gradually raised starting in October.

The oil cartel and its allies are expected to produce 39.7 million barrels per day collectively. Saudi Arabia has the largest share of daily production at 10.4 million barrels, followed by Russia at 9.9 million barrels per day.

The group extended Nigeria’s 1.5 million bpd quota to 2025 despite the federal government’s intentions to produce 2 million bpd in 2025. The decision means Nigeria must plan its 2025 budget with the OPEC+ production quota in mind or go the Angola way that came out. after being assigned a lower than expected production quota.

Additional decisions taken by the JMMC include granting authority to hold regular meetings to review market conditions for both OPEC and non-OPEC members, and extending the 2026 review period to November 2025.

Falling crude oil prices and weak demand

Over the past two months, oil prices have fallen as geopolitical tensions have eased and demand has shown signs of weakening. Additionally, there are signs of a weakening physical market, illustrated by the sharp narrowing of the Brent spread to 13 cents.

On Monday, the average price of gasoline in the United States fell 5.8 cents a gallon to $3.50 a gallon.

The US government is due to release data on inventory and products supplied on Wednesday. Of particular interest is the supply figure, often seen as a demand indicator, which will reveal the extent of gasoline consumption over the Memorial Day weekend, marking the start of the US driving season.

Analysts suggest that concerns about these macroeconomic indicators from the world’s top oil consumer are likely to persist, weighing on prices in the near term.