Oil dips on uncertainty over producers’ commitment to output cuts
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%, at $39.91 a barrel as of 0106 GMT and U.S. West Texas Intermediate (WTI) crude futures fell 15 cents, or 0.4%, 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 coronavirus.
WTI is up nearly 5%, while Brent has risen about 13%
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.