Wednesday, May 31, 2023

The four-day streak is due to OPEC+ differences

Oil prices closed lower on Thursday after Russian Deputy Prime Minister Alexander Novak hinted at the possibility of further OPEC+ production cuts at their meeting next week. Thus, the price of a barrel of oil rose today in New York, reversing a series of four consecutive days.

Oil futures ended lower for the first time in four sessions after a senior Russian official ruled out the possibility of further output cuts when OPEC+ meets early next month.

A barrel of the Brent variety fell 2.7% to US$76.30 and West Texas Intermediate (WTI), which was traded in the United States, fell 3.2% and traded at US$72.

“I don’t think there will be new measures, because a month ago certain decisions were made about the voluntary reduction of oil by some countries…” Novak was quoted as saying by the Izvestia daily.

OPEC announcements confuse the market

Top OPEC+ producers have issued a series of mixed messages about the next steps in oil policy in recent days, as it is particularly difficult to predict the outcome of the next meeting.

Crude oil prices were warned by Saudi Arabia on Tuesday that short-term sellers bet on falling oil prices to be “cautionary.”

Some investors took this warning as a sign that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, collectively called OPEC+, may consider further production cuts at their June 4 meeting.

Expect unilateral cuts to some countries

“The obvious choice is for the Kingdom to unilaterally cut oil production or orchestrate a wider OPEC+ cut, thereby helping prices and stimulating speculators to short oil,” analysts at bank MUFG said.

Just a week before Prince Abdulaziz bin Salman’s comment, Russian President Vladimir Putin stated that oil production was necessary to maintain certain price levels.

Uncertainty about the US debt ceiling also weighed on prices. Indeed, House Speaker Kevin McCarthy said on Thursday that some progress had been made, but several issues remained to be resolved in the negotiations, such as the deadline to raise the federal government’s debt ceiling of US$31.4 billion or risk default.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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