© Reuters. A 3D-printed oil pump jack is shown for displaying stock graphics and Opec logo in this illustration photo
By Florence Tan
SINGAPORE (Reuters) – Oil prices slipped on Monday, reversing strong gains made in the previous session after OPEC + agreed last week to gradually reduce some of its production cuts between May and July.
futures for June fell 33 cents, or 0.5%, to $ 64.53 per barrel by 0206 GMT, while US West Texas Intermediate crude for May was at $ 61.20 per barrel, 25 cents, or 0.4%.
Both contracts ruled more than $ 2 a barrel on Thursday, as investors attended the OPEC + review as a confirmation of demand-led recovery and optimism was reinforced by US President Joe Biden’s $ 2 billion infrastructure plan for infrastructure. Markets were closed Friday due to the Easter holiday.
The Organization of the Petroleum Exporting Countries, Russia and its allies, a group known as OPEC +, have agreed to reduce production stocks by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and a further 400,000 bpd or so in July.
The decision came after the new US government called on Saudi Arabia to keep energy affordable for consumers, despite concerns, as parts of Europe remained under siege, while Japan could expand emergency measures as needed to bring a new wave of coronavirus. to contain infections.
Under Thursday’s agreement, OPEC + cuts would be just over 6.5 million bpd as of May, compared to just under 7 million bpd in April.
Most of the increase in supplies will come from the world’s top exporter, Saudi Arabia, which said it was withdrawing its extra voluntary cuts for July, a move that added 1 million bpd. Following this, Saudi Aramco (SE 🙂 increased official sales prices (OSPs) to Asia for May on Sunday.
“The increase in output was followed by an increase in the OSP, which I think a tandem shows the confidence that the bloc has in demand recovery,” said OCBC economist Howie Lee.
This week, investors are focused on indirect talks in Vienna between Iran and the United States as part of broader negotiations to revive the 2015 nuclear division between Tehran and global powers.
Prior to the talks, Iran’s foreign ministry said it wanted the United States to lift all sanctions and reject any “step-by-step” easing of restrictions.
Eurasia analyst Henry Rome said he expects US sanctions, including restrictions on the sale of Iranian oil, to be lifted only after these talks are completed and until Iran returns to compliance.
“Diplomacy could extend months and nuclear compliance could last as long as three months,” he said in a note, adding that implementation of such a deal and a rise in oil exports could last until early 2022.
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