Major Oil Producers To Meet Saturday About Output Cuts

Top oil producing countries will meet via video conference on Saturday instead of next week, a source close to OPEC said Friday, to assess their current agreement on output cuts, as oil prices recovered somewhat on easing coronavirus lockdowns.

OPEC's 13 members led by Saudi Arabia, and their 10 allies that include Russia, had originally been due to meet June 9 and 10.

But Algeria, which currently chairs the Vienna-based organisation, proposed a change of date intended, according to analysts, to better synchronise the decisions of oil producers with the timing of transactions on the oil market.

Friday's news boosted oil prices as producers appeared to move towards agreement on extending their huge output cuts, which are aimed at soaking up surplus crude.

The countries are discussing a deal agreed in April to cut output aimed at boosting oil prices, which have plummeted due to falling demand as countries around the world have imposed strict lockdowns to stop the spread of the new coronavirus.

OPEC and the so-called OPEC+ have pledged to cut output by 9.7 million barrels per day (mbd) from May 1 until the end of June.

Under the terms of the agreement, the historic cuts would be gradually relaxed from July with 7.7 mbd taken off the market from July to December.

OPEC and OPEC+ are set to discuss extending the 9.7 mbd beyond June though agreement could be difficult to reach.

April's deal was signed after days of wrangling between major players, whose revenues have been ravaged by the collapsing oil market this year.

New York light sweet crude nosedived into negative territory for the first time in history on April 20, plagued by demand-destroying coronavirus, a vast supply glut and a Saudi-Russian price war.

West Texas Intermediate crude hit a historic low of minus $40.32 per barrel as sellers were forced to pay to offload the May contract amid scarce storage capacity.

Since then, oil prices have recovered strongly to trade at about $40 per barrel on an easing supply glut and the output cutss by OPEC and its allies.

The market has been soothed by the relaxing of global coronavirus lockdowns that have crippled oil-intensive sectors like transport and manufacturing.

In Friday afternoon deals, WTI oil prices were up 2.3 percent at $38.27 per barrel, while London Brent crude was 3.0 percent higher at $41.19.

Yet the market could look "sharply different" on Monday, depending on the outcome of the weekend deliberations, Think Markets analyst Fawad Razaqzada told AFP.

"The fact the meeting will happen over the weekend means there will be a big risk... (that) when the futures re-open next week, prices could be sharply different to where they close on Friday," he said.

"If the OPEC+ agrees to extend the 9.7 million barrels per day cuts for two or more months, then Brent crude prices could climb towards $45 per barrel.

"Anything short of that will likely disappoint the markets," he added.