West Texas Intermediate (WTI) crude prices fell to around \$61.10 per barrel during early European trading on Tuesday, marking the second consecutive session of losses amid growing pressure from expectations of increased market supply. This comes as markets await the upcoming OPEC+ meeting, where the alliance may decide to raise production by an additional 411,000 barrels per day in July, according to Reuters. The group may also move to phase out the remaining voluntary production cut of 2.2 million barrels per day by the end of October.
Sources within OPEC+ stated that eight member countries that previously pledged additional voluntary cuts will hold a meeting on May 31 to discuss accelerating the pace of production increases for the second month in a row. The final decision on production quotas is expected during a ministerial meeting scheduled online for May 28, according to Russian Deputy Prime Minister Alexander Novak.
At the same time, doubts are growing about future oil demand amid increasing concerns over the performance of the U.S. economy. This is driven by a growing wave of pessimism toward U.S. assets, often referred to as “Sell America,” following Moody’s downgrade of the U.S. credit rating from Aaa to Aa1 — the first such downgrade since 1917. The agency attributed the move to rising U.S. debt levels and continued political gridlock in Washington over addressing the fiscal deficit.
Attention is also focused on a major legislative package proposed by President Donald Trump, which includes tax cuts, increased spending, and a hike to the debt ceiling. While the White House has promoted the proposal as a comprehensive plan to stimulate the economy, the Congressional Budget Office has estimated that it could add about \$3.8 trillion to the federal deficit. This has raised concerns about further deterioration in U.S. public finances, with expectations that bond yields may remain elevated for longer, potentially increasing borrowing costs and negatively impacting demand in the world’s largest energy-consuming economy.
Despite these pressures, oil prices could find some support from improved investor risk appetite due to easing trade tensions between the U.S. and the European Union. After threats of new tariffs last Friday, President Trump stepped back following a phone call with European Commission President Ursula von der Leyen and decided to extend the deadline for tariffs on EU imports. In response, the EU agreed to accelerate trade talks with Washington, helping to calm fears of a looming trade crisis between the two sides.
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