MW OPEC+ plan to lift output pulls Brent oil to lowest finish since September

By Myra P. Saefong abd William Watts

Natural-gas futures gains 5.5% as tariff war feeds uncertainty

Oil futures settled lower Tuesday, with global benchmark prices ending at their lowest since November, a day after the Organization of the Petroleum Exporting Countries and its allies said they would proceed with plans to unwind some production curbs in April.

Worries over the economic outlook were also seen as a weight on crude prices as U.S. tariffs on Mexico, Canada and China took effect, with Canada and China retaliating through their own tariffs on the U.S.

Price moves

-- May Brent crude BRN00 BRNK25, the global benchmark, edged down by 58 cents, or 0.8%, to settle at $71.04 a barrel on ICE Futures Europe after trading as low as $69.75. Based on the front month, prices saw their lowest intraday level since September and lowest finish since November, according to Dow Jones Market Data.

-- West Texas Intermediate crude CL00 for April delivery CL.1 CLJ25 fell 11 cents, or 0.2%, to $68.26 a barrel on the New York Mercantile Exchange, ending at the lowest since December.

-- April gasoline RBJ25 rose 0.3% to $2.19 a gallon, while April heating oil HOJ25 tacked on 1.2% to $2.29 a gallon.

-- Natural gas for April delivery NGJ25 settled at $4.35 per million British thermal units, up 5.5%.

Market drivers

The OPEC+ decision to unwind previous production cuts raises concerns about potential oversupply, Joseph Dahrieh, managing principal at Tickmill, said in emailed commentary. "With increased output, global crude prices face downward pressure, particularly if demand growth fails to match the rise in supply."

OPEC+ members on Monday said they would go ahead with a plan to boost production starting April 1 by gradually unwinding their voluntary production cuts of 2.2 million barrels per day.

In a note Tuesday, David Oxley, chief climate and commodities economist at Capital Economics, said he had assumed OPEC+ would stick to its existing plan, and therefore Monday's announcement did not require Capital Economics to change its base-case forecasts for the global oil market.

OPEC+ has "given itself plenty of wiggle room to shift course 'subject to market conditions' and so there will surely be plenty of twists and turns in the future," Oxley said. However, "the downside risks to our already below-consensus forecast for the Brent crude-oil price to fall from just over $70 [per barrel] at present to $60pb by the end of 2026 are building."

In any case, a key point to the oil-market developments is that the "uncertainty posed by internal politics within OPEC+ has rapidly been usurped by wider uncertainty in the global market, most of which can be traced back to President [Donald] Trump," Oxley said.

In retaliation for the U.S. tariffs, China announced Tuesday it would impose additional tariffs of up to 15% on imports of key U.S. farm products, including chicken, pork, soy and beef, and expanded its controls on doing business with U.S. companies. Canada is also preparing to implement retaliatory tariffs.

Read: The U.S. is the world's largest oil producer. So why does it still import crude from Canada?

Elliott Orsillo, co-founder and investment adviser at Season Investments, told MarketWatch that while "geopolitical uncertainty surrounding tariffs is compounding the concerns and giving oil traders even more reasons to reduce their net long positions in the commodity," the biggest factor affecting the oil markets is bearish economic data. That, he said, has led to "concerns about demand reduction and the potential for temporary oil oversupply."

Natural-gas futures, meanwhile, rallied sharply for a second straight session to settle at their highest since late December 2022.

The gas market has had a clear bullish reaction to the tariff news, said Seth Harper, commodity analyst at Schneider Electric, in a Tuesday note. "Increasing trade tensions, tighter fundamentals at baseline, and pending uncertainty in the natural-gas market sparks volatility when more uncertainty is introduced."

Energy traders also await the weekly report on U.S. petroleum supplies from the Energy Information Administration, due out Wednesday morning.

On average, analysts polled by Platts, part of S&P Global Commodity Insights, expect the government agency to report a climb of 1.3 million barrels in domestic commercial crude stockpiles for the week ended Feb. 28. They also forecast weekly inventory declines of 700,000 barrels for gasoline and 800,000 barrels for distillates.

The Associated Press contributed.

-Myra P. Saefong -William Watts

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March 04, 2025 15:17 ET (20:17 GMT)

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