Yahoo Finance OPEC+ set to roll over output cuts in June - Citi
Investing.com - Crude prices have risen Thursday, bouncing after three days of selling, but overall sentiment remains weak, and this increases the chance of OPEC+ rolling over its output cuts at the June meeting, according to Citi.
AT 10:10 ET (14:10 GMT), Brent oil futures rose 0.7% to $82.45 a barrel, while West Texas Intermediate crude futures rose 0.7% to $78.14 a barrel.
Both benchmarks fell more than 1% on Wednesday, for their third straight day of losses.
“Recent market softness has come on the back of weaker data, including rising oil inventories, tepid demand, and refinery margin weakness and the increasing risk of run cuts,” analysts at Citi said, in a note dated May 22.
Geopolitical risks have eased, but have not disappeared, the bank said, while global oil inventories continued to show April stock builds extending into May so far, including in this week’s high-frequency data, globally and in the US.
Additionally, funds continue to liquidate net length across the crude oil complex amid a clear bearish turn in the price trend and an erosion of geopolitical risk premia.
“Given this backdrop, we continue to expect that OPEC+ holds its production cuts through 3Q, and we actually project the group to hold through the rest of 2024 and into 1H ’25 as our base case,” Citi said.
Any hint of tapering or even discord among OPEC+ producers ahead of/during the upcoming June meeting could be bearish for prices, near-term, the bank said.
A deeper cut would likely be a bullish surprise, but remains a low probability in our view, Citi added.
The Organization of Petroleum Exporting countries and allies, known as OPEC+, is making voluntary output cuts totalling about 2.2 million barrels per day for the first half of 2024, led by Saudi Arabia rolling over an earlier voluntary cut.
These curbs come on top of earlier reductions announced in various steps since late 2022 and bring the total pledged cuts to about 5.86 million barrels per day, equal to just under 6% of daily world demand.
Related Articles
OPEC+ set to roll over output cuts in June - Citi
Oil creeps back up after three days of losses
Oil prices rebound; US rate jitters, surprise inventory build weigh
