Oil prices have risen as traders are waiting for signals from a meeting that could take place next weekend. It is expected that the largest OPEC producers and their allies will discuss whether record cuts in production should be extended by at least one month.
The cost of a barrel of August Brent oil on June 5 to 8:36 in Kiev was $ 40.15 (+ 0.40%). A barrel of July WTI oil was trading at $ 37.38 (-0.08%). During morning trading, the maximum prices for reference grades of black gold were $ 40.24 and $ 37.53, respectively.
Over the past week, Brent went up by 14%, while the cost of the WTI mix increased by almost 6%. This is the sixth consecutive week of oil quotes growth. The increase was due to a decrease in production amid signs of improved demand for fuel associated with a relaxation of the quarantine regime worldwide.
Ministers of OPEC member states and the allied cartel of countries will gather on Saturday to discuss an extension of the May and June cuts in production, Algerian television channel Ennahar reported on the eve, citing a source in OPEC. Earlier, three sources in the OPEC + alliance reported that a ministerial video conference could be held this week if Iraq and other producers agree to improve their performance discipline under the oil cut reduction pact.
Edward Moya, a senior market analyst at OANDA, said oil prices were approaching their sixth weekly increase, but growth slowed as traders fear that Iraq will stick to the principle of cutting supplies “by the smallest amount.”
“There is still a chance that they will be able to extend the agreement to three months, but energy traders will be extremely skeptical that compliance with [the terms of the OPEC + deal] will remain high after July,” Moya added.
Saudi Arabia and Russia, the two largest oil producers in the world, want to extend production cuts by 9.7 million barrels per day. (b / s) until the end of July. It was expected that this decision would be approved on June 4 at the OPEC + summit, but it was postponed due to disputes about improper compliance with obligations to reduce supplies by manufacturers such as Iran and Nigeria.
“There is growing concern that not only a deal to prolong the maximum level of reductions will not be reached, but [some] manufacturers will refuse to further reduce production. This will ultimately lead to an increase in the supply of raw materials in the coming weeks, ”says an ANZ Research research note.
If OPEC + does not agree to extend the current restrictions, then in July the reduction in oil production instead of 9.7 million b / s will be 7.7 million b / s, i.e. supplies of raw materials will increase by 2 million bpd. To these should be added 1.18 million bpd of additional barrels that will return to the market after the refusal of Saudi Arabia, Kuwait and the UAE to voluntarily reduce oil production in excess of the OPEC + quotas stipulated by the transaction (1 million bpd, 100 thousand bpd and 80 thousand bps, respectively).
Source: enkorr
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