OPEC+ could be extending current oil output cuts for 1-2 months

Ross J Burland FXStreet

Energy Intelligence reports of a source that has said Opec+ will discuss extending the current 9.7 million bpd cuts for 1-2 months.

"Opec-plus could meet on Jun. 4 to decide on a market management policy that might extend the current production cut pact by up to two months."

Market implications

Inventory levels are on the increase pertaining to a surge in US crude oil imports, particularly from Saudi Arabia. This news was serving to cap the recent rally in prompt prices. "But, it is worth noting the surge in imports is likely a temporary phenomenon as the shipments were sent before OPEC+ came to their historic production cut deal," analysts at TD Securities explained.

With that said, and as demand continues to normalize, we continue to expect crude fundamentals will remain on a tighter path throughout the summer. This will see inventory builds make way for draws, and support our long WTI Dec20-Dec21 spread.

Extensions will only go to serve as further fuell to the bid.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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