Oil up as market eyes OPEC for extended production cut

June 2, 2020: Oil prices were up on Tuesday as the global oil market awaits the meeting this week between the Organization of Petroleum Exporting Countries (OPEC) and its allies to further extend crude production cuts.

International benchmark Brent crude was trading at $38.68 per barrel at 0636 GMT for a 0.9% gain after closing Monday at $38.32 a barrel.

American benchmark West Texas Intermediate (WTI) was at $35.74 a barrel at the same time for a 0.8% increase after ending the previous day at $35.44 per barrel.

OPEC and non-OPEC oil-producing nations are set to meet sometime this week to discuss the possibility of extending oil production cuts through July or August.

The 23-nation group, dubbed as OPEC+, had agreed in April to cut their total oil output by 9.7 million barrels per day (bpd) from May 1 through June 30.

The group also agreed in April to ease the cuts to 7.7 million bpd from July 1 to Dec. 31 this year, but this is still not enough to trim the glut of supply in the global oil market.

Due to coronavirus-related weak global oil demand, crude storage capacity around the world has been rising rapidly, forcing producers to quickly sell crude in hand at discount prices.

Crude prices will rise if quarantine measures in Asia, Europe and North America are removed gradually, which, in turn, would lead to higher oil consumption.

APP