Oil prices down as OPEC+ delays output decision 

Oil prices down as OPEC+ delays output decision

Oil prices dipped after OPEC+ delayed its ministerial meeting to hold more talks on oil output policy, this comes after the United Arab Emirates balked at a plan to add back 2 million barrels per day (bpd) in the second half of the year.

U.S. West Texas Intermediate (WTI) crude futures were down 10 cents at $75.13 a barrel at 0501 GMT, having jumped 2.4% on Thursday to close at their highest since October 2018.

Brent crude futures inched down 7 cents to $75.77 a barrel, after rising 1.6% on Thursday.

Both benchmark contracts posted strong gains on Thursday over a plan backed by OPEC+. The proposal was for the producer group to add back 400,000 bpd each month from August through December 2021.

Responding to oil demand destruction caused by the Covid crisis, OPEC+ had last year agreed to cut output by almost 10 million bpd from May 2020, with plans to phase out the curbs by the end of April 2022.

Moscow and Riyadh had also proposed extending the duration of cuts until the end of 2022 to avoid a new glut next year.

But the UAE, which has ambitious oil output growth targets, objected to the proposal during the meeting, sources said, adding that it asked OPEC+ to change the baseline for cuts – a level of initial output from which reductions are calculated.

WTI was on track for a 1.6% rise for the week with the U.S. crude market seen tightening as refinery runs pick up to meet recovering gasoline demand, while U.S. shale oil production has not risen at the same pace.

Brent was heading for a 0.5% fall for the week, reflecting concerns about fuel demand in parts of Asia where cases of the highly contagious COVID-19 Delta variant are surging.

Damon Harrison
Market Analyst, IPG Group