Oil steadies as Opec+ set to meet this week

The alliance may convene on June 4 instead of the earlier proposed dates of June 9 and 10

Opec+ is cutting back production until 2022 to counter the demand crunch from the coronavirus pandemic. AFP

Oil prices steadied as members of the Opec+ alliance could convene their scheduled meeting this month earlier to possibly extend the current level of cuts for the short term.

The alliance, which is led by key producers Saudi Arabia and Russia, may meet on June 4 instead of the earlier proposed dates of June 9 and 10.

Producers are looking to have more clarity on production output ahead of crude allocations for export for the month of July.

Brent, the global benchmark, remained fairly unchanged trading at $37.85 per barrel, while West Texas Intermediate, the US gauge, also held steady from its close on Friday, at $35.52 per barrel at 10.44am UAE time.

Opec+ has been cutting back more than 9.7 million barrels per day in May and June, with the cuts expected to gradually taper off.

However, the demand slump in April, as well as high levels of global crude inventory that still prevail in the market, prompted calls for continuing the deep cuts.

Russia, which was reluctant to get on board with Opec+ cuts earlier has been looking to ease the curbs from July onward.

“Opec+ allies will likely reiterate their willingness to extend the May and June production cuts into [the second half of] 2020 if necessary," said Abu Dhabi Commercial Bank chief economist Monica Malik. The "Opec+ leadership is also likely to insist member countries to abide by the agreed compliance levels.”

Gulf members of the Opec+ alliance are cutting more than their quota as they look to rebalance the markets sooner.

Saudi Arabia is cutting a further million bpd of supply from the markets in June, bringing its total output curbs to 4.8m bpd. Production for the month of June for the world's largest oil exporter is expected to average 7.492m bpd.

Kuwait will also cut an additional 80,000 bpd, while the UAE is committed to further reductions of 100,000 bpd.