Oil futures on Thursday extended a pullback that’s taken the U.S. benchmark back below the $80-a-barrel threshold, erasing gains scored after OPEC+ announced surprise production cuts early this month.
Price action
- West Texas Intermediate crude for May delivery CL.1,
-2.36% CLK23,-2.36% fell $1.87, or 2.4%, to end at $77.29 a barrel on the New York Mercantile Exchange on the contract’s expiration day. June WTI CL00,-2.56% CLM23,-2.56% , the most actively traded contract, lost $1.87, or 2.4%, to settle at $77.37 a barrel. - June Brent crude BRN00,
-0.26% BRNM23,-0.26% , the global benchmark, declined $2.02, or 2.4%, to $81.10 a barrel on ICE Futures Europe. Both Brent and WTI prices settled at their lowest levels month to date. - Back on Nymex, May gasoline RBK23,
-2.04% fell 2.2% to $2.59 a gallon, while May heating oil HOK23,-2.47% dropped 2.5% to $2.49 a gallon. - May natural gas NGK23,
added 1.2% to $2.25 per million British thermal units.
Market drivers
Crude surged in early April, leaving a large upside gap on the daily charts, after Saudi Arabia and its OPEC+ allies announced cuts of around 1.15 million barrels a day beginning in May and running through the end of the year, while Russia said it would extend cuts of 500,000 barrels a day through year-end.
The WTI and Brent crude benchmarks were on track to mark their first weekly loss in five weeks, pressured by strength in the U.S. dollar and concerns that monetary tightening by the Federal Reserve and other major central banks could spark a global downturn or recession.
The ICE U.S. Dollar Index DXY,
BigCharts 
Prices for both WTI and Brent crude have fallen back to their lowest levels since March 31, after climbing in early April on a surprise OPEC+ decision on production cuts.
Futures continue to test the gap on the chart left by the OPEC+-inspired rally (see chart above). Prices for both WTI and Brent crude have fallen back to their lowest levels since March 31, the last regular trading session before the OPEC+ production-cut announcement on April 2.
“Now it’s a question of whether that gap will be filled, with the high from the Friday before falling just shy of $76 in WTI and $78 in Brent. That would require another drop of around 3% but only take the price back to the middle of the range oil was trading in for months” before the collapse of Silicon Valley Bank in March, said Craig Erlam, senior market analyst at Oanda, in a note.
On Thursday, U.S. benchmark crude marks three years since it settled at a negative price for the first time on record.
Right now, markets are struggling with recessionary concerns in industrialized nations but the “upside support from China’s reopening will be more than enough to support renewed upwards price growth in the second half of 2023,” said Matthew Parry, head of long-term analysis at Energy Aspects.
Read: Oil prices crashed below zero 3 years ago, with the spotlight back on demand and volatility
Natural-gas futures, meanwhile, gave up early losses to finish higher after the U.S. Energy Information Administration reported on Thursday that domestic natural-gas supplies rose by 75 billion cubic feet for the week ended April 14.
That was larger than the average increase of 66 billion cubic feet forecast by analysts polled by S&P Global Commodity Insights, which pegged the average five-year increase at 41 billion cubic feet.
