(* Updates with Novak’s remarks)
By Barani Krishnan
Investing.com – The ministers controlling the OPEC+ oil cartel pushed forth a two-day meeting scheduled this week to June, leaving intact a decision to ease production cuts despite the Covid catastrophe in India, the third-largest crude importer.
Crude prices rose, rebounding from Monday’s drop, as traders kept a close watch on the global pandemic situation, including in Japan, the fourth-largest oil buyer, which has declared a state of emergency amid preparations for the Tokyo Olympics that is to begin in 87 days.
Ministers of OPEC+ were originally supposed to hold Zoom conferences on Tuesday and Wednesday to further discuss plans made on April 1 to ease production cuts.
But the meeting was postponed at the 11th hour, with Russian Deputy Prime Minister Alexander Novak, the second most powerful person in the oil cartel, saying it will now be held at the start of June.
“On June 1st, the OPEC+ ministerial meeting will take effect,” Novak said in a comment carried by Reuters. “In July and August, we will consider output volumes.”
New York-traded West Texas Intermediate, the benchmark for U.S. crude, was up 49 cents, or 0.8%, at $62.40 by 12:25 PM ET, off the session high of $62.83.
London-traded Brent, the global benchmark for crude, gained 42 cents, or 0.7%, to $65.45. Brent’s session peak was $65.89.
“Oil clawing back some losses from the previous session. However, gains are likely to remain capped as the Covid crisis continues,” said Sophie Griffiths, who heads research for U.K. and EMEA at online broker OANDA.
India, home to the world’s worst ongoing coronavirus outbreak, has reported more than 17.6 million cases since the pandemic began last year, making it second worst infected country after the United States, which has some 32 million cases so far. But India’s real Covid caseload could be 30 times higher — meaning more than half a billion cases — experts told CNN.
Despite the alarming situation in the world’s third largest oil consumer, OPEC+’s Novak said crude prices are “in a good place, and demand is increasing”.
“The global oil market is seeing a rebound in production and mobility,” he said. “Oil rates are expected to remain steady before the end of the year.”
The 23-member OPEC+ comprises the original 13 members of OPEC, or the Saudi-led Organization of the Petroleum Exporting Countries, and 10 other oil producing nations steered by Russia.
The group announced early this month its first meaningful production hike in a year, after withholding at least 7 million barrels per day in output since April 2020.
OPEC+ said it will pump an additional 350,000 barrels per day in May and June, and a further 400,000 barrels daily in July.
Oil prices fell to a historic minus $40 per barrel in April 2020 at the height of the demand destruction caused by the Covid-19. Production cuts since then by OPEC+ helped the market recover, with the rebound particularly accelerating after vaccine breakthroughs in November.
An OPEC+ joint technical committee that met on Monday envisioned the oil glut built up the height of the pandemic almost gone by the end of the second quarter — despite the Covid situations in India and Japan.
The committee saw oil supplies declining by 1.2 million barrels a day and demand rising by 6 million barrels daily in 2021, the reports said.
OPEC Bigwigs Opt for June Meeting; Oil Off-Highs, Watching India