The market is concerned that OPEC+ is about to increase production, and the lack of transparency in U.S.-China trade relations is putting pressure on oil prices.
According to the Zhitong Caijing APP, crude oil futures closed lower on Monday after rising in the previous two trading days. The market is worried about OPEC+'s imminent production increase and the lack of transparency in China-USA trade relations, which puts pressure on oil prices.
Aldo Spanjer, the head of energy strategy at BNP Paribas, pointed out that Kazakhstan has recently been reported to put "national interests above production quotas," raising concerns about OPEC+'s internal unity. The institution warns that if Kazakhstan does not cut production as promised, OPEC+'s supply in June may increase significantly, which would become "the biggest bearish factor in the current market." The bank maintains its forecast of $60-70 per barrel for Brent crude in the second quarter and $70 per barrel in the third quarter.
Analyst Razan Hilal from Forex.com added that OPEC+ may choose to sacrifice short-term oil prices in exchange for long-term market share, "but a sustained rebound still requires substantial progress in trade negotiations and economic data to cooperate."
The trajectory of China-USA trade relations continues to influence the market. Gary Cunningham, the market research director at Tradition Energy, stated: "The wait-and-see attitude in trade negotiations is eroding market confidence, and if the negotiations break down leading to a decline in Chinese demand, oil prices will come under heavy pressure."
The near-month contracts for crude oil and Brent crude oil on the New York Commodity Exchange in June fell by 1.5% to $62.05 per barrel and $65.86 per barrel, respectively, while Henry Hub Natural Gas futures rose sharply, with the near-month contract in May up 7.9% to $3.170 per million British thermal units.
$Exxon Mobil (XOM.US)$and$Chevron (CVX.US)$ It is one of the large Oil & Gas companies that will announce first-quarter results this week, and investors will focus on how the decline in oil prices will increase the risks to dividends and Share Buybacks for the remainder of 2025.
The global benchmark Brent crude oil price averaged $74.98 per barrel in the first quarter, up 1.3% from the previous quarter, but oil prices began to plummet on April 2 after Trump announced tariffs on trade partners.
Some Analysts indicate that if oil prices remain weak, Chevron may reduce its Share Buyback, as the company needs a Brent Crude Oil Product price of $95 per barrel to pay dividends and buy back shares, while Exxon Mobil's price is $88, according to RBC Capital, which added that both companies can pay dividends at around $55 oil prices.
Bank of America Analysts assume that the Brent Crude Oil Product price will be $60 per barrel in 2025, believing that Chevron will buy back $11 billion worth of Stocks this year, which is at the lower end of the company's expectations, while Exxon Mobil will buy back $13.5 billion worth of Stocks, which is below its $20 billion expectation.
Analysts generally believe that Exxon Mobil is more capable of maintaining dividends and buybacks due to its surplus Cash / Money Market on its balance sheet and efforts to reduce Oil & Gas production costs.
Editor/Lee
