By Dhirendra Tripathi
Investing.com – Occidental Petroleum (NYSE:OXY) led the weakness in shares of oil companies Monday as the prospect of more crude supplies gripped the market.
Occidental, which has no downstream hedge to cushion itself against crude price fluctuations, was down 5%.
Chevron (NYSE:CVX) fell 2.5%. Oil marketers as well as integrated players declined. Exxon Mobil (NYSE:XOM), Shell (NYSE:RDSa) and Marathon Petroleum Corp (NYSE:MPC) fell between 2% and 3% each. Broader worries over a stalling vaccination program in many countries and global economic growth amid a rapidly-spreading Delta variant of the coronavirus also weighed on the sentiment.
Sunday, after acrimony between members Saudi Arabia and the UAE, the oil cartel OPEC+ reached an agreement on raising crude production starting next month.
The 23-member coalition will ease its production cuts by 400,000 barrels per day each month. The oil body also allocated five members more generous output quotas starting May.
The deal also extends the OPEC+ supply pact to the end of 2022, from the previous deadline of April 2022.
The effect will be a potentially sizeable bump in OPEC+ production in the latter half of 2022, according to S&P Global (NYSE:SPGI) Platts.
With higher supplies and peace among the warning members in sight, oil prices drifted lower.
At 0930 ET, Brent Oil Futures was more than 3% lower at $71.25 and Crude Oil WTI Futures 3.6% at $69. Both benchmarks recorded their largest declines since early April today.