Yemisi Izuora
Oil prices eased slightly on Friday as markets wait to see whether major producers will commit to an extension of record production cuts to support oil prices.
Brent crude futures were down 8 cents, or 0.2 per cent, at $39.91 a barrel while the US West Texas Intermediate, WTI, crude futures fell 15 cents, or 0.4 per cent, to $37.26 a barrel.
Still both benchmarks are set for a sixth weekly gain on the back of output cuts and signs of improving fuel demand as countries begin to ease restrictions to prevent the spread of the COVID-19.
WTI is up nearly 5 per cent, while Brent has risen about 13 per cent
OPEC+ will meet on Saturday to discuss extending output cuts, Algeria’s Ennahar TV channel reported on Friday citing an OPEC source. Three OPEC+ sources said earlier a ministerial video conference could be held this week, should Iraq and others agree to boost their adherence to existing supply cuts.
The Organization of the Petroleum Exporting Countries and allies led by Russia, a grouping known as OPEC+, had been expected to meet on June 4 to discuss extending output cuts, but the meeting was delayed amid talks over poor compliance by some producers.
“The oil group is struggling to find consensus around extending deep output cuts,” ANZ Research said in a note.
“The growing fear is that not only will a deal to extend the deep cuts not be reached, but producers may even relax their current over-compliance. This would ultimately see output rise in coming weeks.”
Saudi Arabia and Russia, two of the world’s biggest oil producers, want to extend output cuts of 9.7 million barrels per day (bpd) into July.
If OPEC+ fails to agree to roll over the current output curbs, that would mean the curbs could scale back to a cut of 7.7 million bpd from July through December as earlier agreed.
Meanwhile, the OPEC+oil producers could still hold a virtual ministerial meeting this week if Iraq and others that have not fully complied with current oil supply cuts agree to boost their adherence, three Opec+ sources told Reuters on Thursday.
The Organization of the Petroleum Exporting Countries and its allies led by Russia, a group known as OPEC+, are still debating when to hold their virtual ministerial meeting to discuss a possible extension of oil supply cuts.
A suggestion by current OPEC president Algeria to hold the meeting on Thursday was held up by discussions over some countries’ poor level of compliance in May.
“There are discussions between the ministers about the possibility of making up for poor May compliance in June and July,” one source said.
A ministerial meeting could be called at short notice this week if there is an agreement, the sources said.
