Oil Set for Sixth Weekly Gain as OPEC+ Nears Cut Extension Deal

4 Jun by Vitaliy Dadalyan

Oil Set for Sixth Weekly Gain as OPEC+ Nears Cut Extension Deal

Oil Set for Sixth Weekly Gain as OPEC+ Nears Cut Extension Deal(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 were steady near $37 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 holdout Iraq and the cartel could meet as soon as this weekend to ratify it, according to a delegate. The pair were pushing Baghdad to stop shirking its share of cuts and to compensate for past non-compliance.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.See also: Too Early for Shale Obituary as U.S. Oil Wells Return, IEA Says“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 0.1% to $37.46 a barrel on the New York Mercantile Exchange as of 12:06 p.m. in Singapore after climbing 0.3% on Thursday. It’s up 5.6% since May 29, on track for the longest run of weekly gains since April 2019.Brent for August settlement added 0.4% to $40.16 a barrel on the ICE Futures Europe exchange and has risen 6.1% 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. OPEC+ will meet on June 6, according to a report by Russia’s Tass news service that cited an unnamed source participating in the negotiations.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.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.