Last modified: June 21 2021
(Bloomberg)“ Oil rebounded from its biggest slump since November ahead of a key OPEC+ meeting that may see some supply returned to a fast-tightening market.
Futures in New York rose above $62 a barrel. The alliance gathers on Thursday and is expected to loosen the taps after prices got off to their best ever start to a year. But it's unclear how robustly the group will act, with the Saudi Arabian energy minister calling for producers to remain extremely cautious.
Saudi Arabiaâ€™s output curbs, the improving demand outlook as vaccines are rolled out, and the growing popularity of commodities as a hedge against inflation have pushed oil higher this year. There has been a raft of bullish calls in recent weeks predicting the rally will continue as the producer response trails consumption, while maintenance in North Sea fields is set to reduce supply.â€œOPEC+ is well aware of the marketâ€™s view: the remarkable achievement of the last ten months will be seriously damaged in case of complacency,â€ said Tamas Varga, analyst at PVM Oil Associates Ltd. â€œThe current oil balance could live with a moderate production increase but could not justify a bigger one.â€
At stake in the meeting is how much OPEC+ output gets restored and at what pace, with current reductions amounting to just over 7 million barrels a day, or 7% of global supply. The 23-nation coalition will decide whether to revive a 500,000-barrel tranche in April, and in addition, whether the Saudis confirm an extra 1 million barrels theyâ€™ve taken offline will return as scheduled. Citigroup think the group will boost about by 500,000 barrels a day next month, with Saudi Arabia unlikely to continue its voluntary curbs.
SAKET SUNDRIA AND ALEX LONGLEY