Oil futures slumped Monday but were well off the lowest levels of the day as the market continued to assess the state of supply.
The Organization of the Petroleum Exporting Countries and its allies said Sunday they were deepening their production cuts beyond the 1.2 million barrels per day agreed to in December. But Saudi Arabia and Russia appeared to disagree on whether the reductions should be extended into the second half of the year.
OPEC-plus is not likely to decide whether to extend its oil-production cuts until June, closer to their scheduled expiration, Saudi energy minister Khalid al-Falih said, according to S&P Global Platts. The coalition has already scheduled another meeting over June 25-26 in Vienna.
“The consensus from the bilateral [meetings] I had yesterday and this morning is that April will be premature to make any decisions for the second half [of 2019],” the minister of the de facto OPEC leader told reporters, according to the report. “It seems there is a consensus building toward making a decision in June [and] we need to reconsider a need for the April meeting.”
The broad coalition implemented cuts in February that achieved about 90% of the amount it agreed to, al-Falih said at the press conference following the group’s technical meeting. In March, the cuts will be “above 100% easily,” he said, meaning the coalition will hold back slightly more than the 1.2 million daily barrels.
The effort has led to a more than 25% rise in price of Brent oil—the global benchmark—since the year began. Early Monday, May Brent crude LCOK9, +0.03% lost 9 cents, or 0.1%, to $67.07 a barrel on ICE Futures Europe. The contract rose 2.2% for last week.
April West Texas Intermediate crude CLJ9, -0.14% was down 25 cents, or 0.4%, to $58.26 a barrel on the New York Mercantile Exchange. WTI tallied a weekly gain of about 4.4% based on the most-active contracts last week. That marked its sharpest weekly rise since the period ended Feb. 15, according to Dow Jones Market Data.
“Reports that OPEC+ may be forced to extend output cuts to the end of the year don’t appear to be offering much support at the start of the week,” said Craig Erlam, senior market analyst with Oanda.
Al-Falih “suggested so much on Sunday but as ever, it seems that the market is betting more on the impact of slower global growth and U.S. output than the actions of the OPEC+ nations,” said Erlam.
On Friday, the International Energy Agency said output from the Organization of the Petroleum Exporting Countries had fallen by 240,000 barrels a day last month, to 30.68 million barrels day, its lowest level in four years. The IEA cited losses in Venezuela, and lower output from Saudi Arabia and Iraq.
It left its forecast for global oil demand growth in 2019 unchanged at 1.4 million barrels a day.
The IEA report came a day after OPEC released its own monthly oil-market report showing a similar decline for February, though the report also highlighted that by OPEC’s member production fell at a significantly reduced rate than the month prior and well-below the group’s pledge to the market.
Data on Friday from Baker Hughes BHGE, +0.51% showed that the number of active rigs drilling for oil in the U.S., a key metric of activity in the sector, fell for a fourth straight week, though it was down by just one to 833 this week. The EIA on Monday will release its forecast for April U.S. shale oil production.
April gasoline RBJ9, -0.10% fell less than 0.1% at $1.8567 a gallon, after it was up about 3.1% last week, while April heating oil HOJ9, -0.22% lost 0.1% to $1.9652 a gallon, after a weekly decline of 1.9%.
April natural gas NGJ19, -0.61% traded at $2.779 per million British thermal units, down 0.6%, after a loss of 2.4% for last week.
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