Oil prices rise on Tuesday on reports that oil-producing countries, led by Russia and Saudi Arabia, may extend the current level of production cuts until September 1, INTERFAX said.
The OPEC + ministerial meeting will be rescheduled for June 4 from June 9, The Wall Street Journal reported citing sources.
The cost of August Brent crude futures on the London ICE Futures exchange by 8:00 Moscow time on Tuesday is $ 38.64 per barrel, which is $ 0.32 (0.84%) higher than the price of the previous session. As a result of trading on Monday, these contracts rose by $ 0.48 (1.3%), up to $ 38.32 per barrel.
Futures for WTI oil for July in electronic trading on the New York Mercantile Exchange (NYMEX) by this time rose in price by $ 0.18 (0.51%) to $ 35.62 per barrel. By the close of the market on Monday, the price of these contracts fell $ 0.05 (0.1%), to $ 35.44 per barrel.
In April, OPEC + countries decided to reduce oil production again for a period of two years amid a sharp drop in global demand in the context of the coronavirus pandemic.
Their agreement assumes that compared with the level of October 2018 (separate reference bases have been set for Russia and Saudi Arabia - 11 million b / s), OPEC + production will be reduced by 9.7 million b / s (by 23%) in May -June, and in the future the pace of reduction will slow down. So, from June to the end of 2020, the decrease should be 7.7 million b / s (18%), then, until May 2022 - 5.7 million b / s (14%).
According to WSJ, Saudi Arabia insists that the current rate of decline in production - by 9.7 million bpd - be maintained until the end of this year, while Russia would like to slow down the rate of decline from July 1.
The parties are discussing a compromise option, which may consist in maintaining the current rate of decline in production until September 1, sources say.
“As long as OPEC + demonstrates its commitment to jointly reduce oil production, prices will stay in higher ranges,” AxiCorp experts say.