Opec to roll over supply cuts

Dubai - Oil falls over 2% on weaker demand growth, gain in US crude stocks.

The oil production deal by Opec and allies should remain or be extended at least until the end of the year, UAE Minister of Energy and Industry Suhail bin Mohammed Faraj Faris Al Mazroui said on Wednesday as oil prices sank two per cent following a report of another rise in US crude stockpiles.
Speaking at the International Economic Forum of the Americas, the UAE minister said current oil inventories suggest curbs should remain in place, signalling that Opec members are close to reaching an agreement on extending production cuts.
"I think the demand for oil will remain solid in 2020. The right decision will be a rollover," said Al Mazroui, adding that he favours continuing the curbs.
Saudi Arabian Energy Minister Khalid Al Falih said on Monday that Opec was close to making an agreement which would extend its existing deal to cut oil production past June, when the deal expires.
"On the Opec side, a rollover is almost in the bag," Al Falih said at an economic forum in Russia.
"The question is to calibrate with non-Opec. I don't think there will be a need to deepen the cut."
Al Mazroui remarks came as oil prices fell more than two per cent on Wednesday, weighed down by a weaker demand outlook and a rise in US crude inventories despite expectations of extended supply cuts led by Opec.
Brent crude futures, the international benchmark for oil prices, fell $1.36, or 2.2 per cent, to $60.93 a barrel by 1500GMT. US West Texas Intermediate crude futures were down $1.39, or 2.6 per cent, to $51.88 a barrel.
The US Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and US crude production on Tuesday.
"The report was mostly bearish, given the sizeable crude oil inventory build," said John Kilduff, a partner at Again Capital LLC in New York. "It was also impressive that gasoline inventories rose, despite very strong demand on the week."
Opec and allies including Russia agreed in 2018 to cut their output beginning on January 1 to avoid a supply glut. The agreement was to reduce supply by 1.2 million barrels per day for six months using October production as a baseline.
The organisation is scheduled to meet on June 25, followed by talks with its allies led by Russia on June 26. However, Russia suggested moving the meeting to July 3-4 and Riyadh supports the request.
The EIA said US shale producers this month would add 83,000bpd, hitting 8.49 million bpd even as Opec and allies reduce output. Some analysts also predict weaker economic growth will reduce oil demand.
A surprise increase in US crude stockpiles also kept oil prices under pressure.
"Investors have been concerned about the recent rise in stockpiles in the US," ANZ bank said in a note.
US crude inventories rose by 4.9 million barrels in the week ended June 7 to 482.8 million barrels, data from the American Petroleum Institute showed on Tuesday. That compared with analyst expectations for a decrease of 481,000 barrels.
Opec is due to meet on June 25 after talks with its allies led by Russia on June 26, although sources have told Reuters that Russia has suggested a date change to July 3 to 4.
- issacjohn@khaleejtimes.com