Oil prices gave up earlier gains and turned lower as of 11:39 a.m. EDT on Thursday, after reports emerged that Saudi Arabia was offering to gradually ease its additional unilateral cut of 1 million bpd, on top of the OPEC+ group also gradually easing the cuts in the next three months.
The Saudis are proposing to ease the extra cut, beginning with lifting production by 250,000 bpd in each of May and June, on top of the OPEC+ group also easing the cuts, by 350,000 bpd in each of the next two months, Amena Bakr, Deputy Bureau Chief and Chief OPEC Correspondent at Energy Intelligence, reported, quoting sources. The OPEC+ collective production cut is expected to be eased to 5.6 million bpd in July, according to those sources.
The market was more or less expecting a rollover of the current cuts or just a slight increase in view of the recent weakness in oil demand with European lockdowns and with Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, reiterating calls for a cautious approach today. Related: Oil Prices Rise As OPEC+ Agrees To Hike Output With 350,000 Bpd In May
Going into the behind-closed-doors session, the key ministers of Russia and Saudi Arabia spoke at the opening of the meeting, and had somewhat diverging views. Russia appeared more optimistic about oil demand recovery and the market as a whole, while Saudi Arabia hinted at another cautious approach.
Commenting on the planned OPEC+ production rise in the next three months, Roger Diwan, Vice President at IHS Markit, tweeted:
“Increasing production by ~1 million b/d over 3 months when product demand is expected to rise by ~3 million b/d over the same period is not bearish. It is conservative anticipation, but anticipation nonetheless.”
By Tsvetana Paraskova for Oilprice.com
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