Oil prices slip despite OPEC+ cuts as Gulf ends voluntary curbs

June 8, 2020: Oil slipped on Monday after Saudi Arabia said an extension of output cuts by OPEC+ nations would not include extra voluntary cuts by a trio of Gulf producers.

Brent crude was down 14 cents, or 0.3%, at $42.16 per barrel, by 1210 GMT, while U.S. West Texas Intermediate (WTI) crude fell 41 cents, or 1%, to $39.14 a barrel.

The Organization of Petroleum Exporting Countries, Russia and other producers - a group known as OPEC+ - agreed in April to cut supply by 9.7 million barrels per day (bpd) in May and June. They agreed on Saturday to sustain those cuts through July.

Following the extension, top exporter Saudi Arabia hiked its monthly crude prices for July.

But Saudi energy minister Prince Abdulaziz bin Salman told a news conference on Monday that the kingdom and Gulf allies Kuwait and United Arab Emirates would not cut by an extra 1.18 million bpd in July as they are doing this month.

Those cuts were in addition to the 9.7 million bpd OPEC+ plan.

Low prices have prompted Chinese buyers to boost imports. Purchases by the world’s largest crude importer hit an all-time high of 11.3 million bpd in May.

But consultancy JBC Energy warned higher prices could discourage buying and undercut a fragile recovery in demand.

“We cannot shake the feeling that, price-wise, this market has gotten a bit ahead of itself and will need a good confluence of bullish surprises to continue in order to maintain current pricing levels,” JBC said in a note.

Reuters