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Oil Up as OPEC+ Nears Cut Extension Deal  | Rigzone

Oil Up as OPEC+ Nears Cut Extension Deal  | Rigzone

(Bloomberg) — Oil was headed for a sixth weekly gain after OPEC+ reached a tentative agreement to extend record production cuts until the end of July.

Futures in New York edged higher toward $38 a barrel on Friday and are up around 6% this week. After almost a week of wrangling, Saudi Arabia and Russia clinched a deal with Iraq, according to a delegate. The pair were pushing Baghdad to stop shirking its share of cuts and to compensate for past non-compliance. OPEC+ will meet Saturday at 4 p.m. Vienna time, delegates said.

In another potentially bullish driver for oil prices, analysts have been poring over U.S. inventory numbers that don’t add up. While it’s unclear where the discrepancy lies, data sets including stockpiles, output, imports and exports are signaling that official figures on at least some supplies are excessive.

While oil has recovered rapidly from its plunge below zero in mid-April, the pace of the rebound has slowed in the past couple of weeks and further gains may be more difficult without a sustained recovery in demand and more evidence the worst of the virus is over. A continuation of the rally could also encourage more American shale producers to bring wells back online and lead to a fraying of the consensus within OPEC+, which might also cap the advance.

“The world’s oil exporters, including members of the OPEC+ alliance, do not want prices below $30 a barrel, but there’s no consensus on how much higher prices should be,” said Victor Shum, vice president of energy consulting at IHS Markit. If Dated Brent prices move into the $40 to $50 a barrel range there would likely be policy divergence between the Saudis and Russia, he said.

West Texas Intermediate for July delivery rose 0.4% to $37.57 a barrel on the New York Mercantile Exchange as of 7:22 a.m. in London after climbing 0.3% on Thursday. It’s up 5.9% since May 29, on track for the longest run of weekly gains since April 2019.

Brent for August settlement added 0.8% to $40.29 a barrel on the ICE Futures Europe exchange and has risen 6.5% so far this week. Dated Brent, used to price more than two-thirds of the world’s oil, was at $37.71 on Thursday, according to traders monitoring prices from S&P Global Platts.

Riyadh and Moscow, who were on opposite sides of a vicious price war until a deal in April, are now united against countries who have consistently failed to shoulder their share of the burden. Russia, a habitual laggard, has complied punctiliously with the most recent cuts and wants to make sure others are too.

Meanwhile, Saudi Aramco has delayed the release of its July crude pricing until Sunday at the earliest, according to people with knowledge of the situation, as waits for clarity on the extension of production cuts.

To contact the reporters on this story:

Elizabeth Low in Singapore at;

James Thornhill in Sydney at

To contact the editors responsible for this story:

Serene Cheong at

Andrew Janes

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