OPEC’s de facto leader, while Saudi Arabia, said it would increase supply cuts in June, oil prices rose on Tuesday. Other members of the oil-producing group also say they want to extend the deep cuts reached in April longer than initially accepted.
OPEC and its allies decided to cut production by 9.7 million barrels (bpd) in May and June to balance the 30% drop in worldwide fuel demand caused by the coronavirus. According to sources, while the group is considered would reduce the production about 8 million bpd, the action is expected to continue.
West Texas Intermediate (WTI) crude futures settled at $25.78 a barrel, up $1.64, or 6.8%. Brent crude futures settled at $29.98 a barrel, gaining 35 cents, or 1.2%.
Some members say on Tuesday, with the decision to be taken at the next meeting of OPEC and its allies, it is good to continue the 9.7 million bpd cut after June. They do not intend to reduce the size of the production cuts.
Saudi Arabia said on Monday, while reducing its production by 1 million bpd next month, it would drop 7.5 million bpd which is down 40 percent from April.
The United Arab Emirates and Kuwait, in order to support the pact of the reduction in production agreed by OPEC and allies, also additionally committed to reducing production by more than 180,000 bpd.
Kazakhstan has instructed producers in large and medium-sized oil fields to cut production by 22% in May-June, while Russia’s production from the best oil region in western Siberia is expected to drop by 15% this year under the OPEC + agreement.
Sources say they expect to revise global oil demand, down 8.1 million basis points to 92.6 million bpd. Moreover, by 2020, expectations for the US supply have decreased 11.69 million bpd from 540,000 bpd, and the total world supply is expected to be 95.2 million bpd.
The crude oil producers in the US have experienced a supply collapse in some states, as low prices have prompted independent and integrated producers to reduce their operations. Crude oil futures lost about 60% this year. According to the industrial data, crude oil stocks rose last week, while gasoline stocks dropped. Storage data is expected to be released on Wednesday.