Oil retreated after hitting resistance near US$80 a barrel as the OPEC+ coalition met expectations with its latest production move.

West Texas Intermediate settled below $79 a barrel as traders locked in gains from crude’s rally to the key psychological level last week, the first time it had breached that price since November. The Organization of the Petroleum Exporting Countries and its allies extended their roughly 2 million-barrel-a-day reduction through the end of June, with Russia emphasizing it would cut output and not just exports. 

Traders and analysts had already priced in the widely expected OPEC+ decision, which was seen as necessary to offset a seasonal lull in demand and soaring output from other producers. The latest cuts will be returned gradually, subject to market conditions, OPEC’s Secretariat said in a statement.

“Traders are now faced with the dilemma of whether to dive into oil following OPEC’s decision or adopt a wait-and-see approach to gauge whether the bulls will maintain control at the outset of this week,” said Fawad Razaqzada, a market analyst at City Index and Forex.com.  

Crude has been on a slow but steady ascent this year. Widening timespreads are signaling tighter physical conditions driven by a host of disruptions, including attacks on ships in the Red Sea. Still, delayed expectations for when the Federal Reserve will start to lower interest rates, strong production from outside OPEC+ and a shaky Chinese demand outlook have capped gains.

Prices:

• WTI for April delivery fell $1.23 to settle at $78.74 a barrel in New York.
• Brent for May settlement slid 75 cents to settle at $82.80 a barrel.