Oil prices edge down as wary traders eye upcoming OPEC+ meeting

Oil prices edge down as wary traders eye upcoming OPEC+ meeting

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Singapore: Oil prices fell slightly on Monday due to profits from traders. The Organization of Petroleum Exporting Countries (OPEC) is considering meeting as soon as possible this week to discuss whether to expand the record of production cuts beyond the end of June.

Brent crude oil futures prices fell 15 cents, or 0.4%, to $ 37.69 per barrel. The first day of the contract transaction was August, which was the most recent month.

At 0419 GMT, July West Texas Intermediate Crude Oil (WTI) futures prices were $ 35.36 per barrel, down 13 cents or 0.4%.

The price drop came after the price of Brent and West Texas Intermediate Oil (WTI) in recent months reached its highest monthly increase in many years in May. OPEC crude oil production fell to its lowest level in two decades, driving the growth of revenue. As more and more countries have demand due to the corona virus blockade, demand is expected to recover.

“The focus is very much on OPEC+,” OCBC economist Howie Lee said, referring to OPEC and its allies including Russia. OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day (bpd) in May and June after the coronavirus pandemic ravaged demand.

“We might see a cautious pullback in (crude) prices given that downstream prices haven’t caught up … but if OPEC+ does come up with a three-month extension, there’s a possibility that prices may hit the $40 level,” Lee said.

Nonetheless, the tension between China and the United States still haunts global financial markets, and traders are also closely watching the riots that swept over major US cities over the weekend.

The source told Reuters that Saudi Arabia proposed to extend the record of production cuts from May and June to the end of this year, but has not yet won the support of Russia.

Algeria, currently the chairman of OPEC, proposes to convene an OPEC meeting from June 9 to 10 ahead of schedule to promote oil sales in Saudi Arabia, Iraq and Kuwait. Russia has no objection to postponing the meeting until June 4.

“It’s been widely interpreted as likely to lead to an extension of the current production cuts,” CMC Markets’ chief market strategist Michael McCarthy said.

“Oil prices have come down slightly in our session but they’re still at elevated levels. I suspect that’s the key driver of prices on Friday night and should keep prices reasonably well supported today.”

Meanwhile supply in North America is also falling as data from Baker Hughes Co showed that the U.S. and Canada oil and gas rigs count dropped to a record low in the week to May 29.  

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