(Bloomberg) — Oil held steady just days before many of the world’s largest producer nations meet to discuss how much crude they should supply in the coming months.
Crude futures in New York were trading near $61 a barrel. OPEC and its allies will meet on Thursday to decide if they will ease supply curbs further. Ahead of the gathering, Saudi Arabia has urged members to take a cautious approach, despite headline prices having their best ever first two months of a year.
That caution could be warranted too. The structure of the futures curve has weakened so far this week, suggesting some of the tightness in the market is easing. At the same time, Unipec is re-offering cargoes of Angolan crude, a sign of softer crude demand in Asia.
Crude’s strong start has been buoyed by a range of factors, including deep Saudi output cuts. The rollout of vaccines and an investor charge into commodities have also underpinned the gains, which pushed prices in New York to the highest close since 2019.
“I don’t think OPEC+ will crash the party in the sense that it will tip the market into oversupply,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “The selloff is more like ‘great run, this is where we got to for now.’”
The Organization of Petroleum Exporting Countries and its allies must decide how much output is to be restored, with current reductions totaling just over 7 million barrels a day. The grouping is the largest actor in the oil market, with collective production covering more than 40% of worldwide demand.
The buildup to Thursday’s full OPEC+ meeting starts later Tuesday with the group’s Joint Technical Committee gathering. The JTC’s role is to review market conditions and members’ conformity with supply agreements.
Investors will receive clues later Tuesday on the market’s dynamics and outlook with Amin Nasser, chief executive officer of Saudi Aramco, and Mike Wirth, his counterpart at Chevron Corp., among the roster of speakers due to address IHS Markit’s annual CERAWeek conference, which is virtual this year.
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