Home >News >world >Oil holds above $35 with OPEC+ decision on output cuts in focus

Oil traded without direction for a second day as the market waited to see if OPEC and its allies will extend record production curbs.

Futures in New York were steady after closing down 0.1% on Monday. Saudi Arabia and its Gulf allies favor keeping the curbs -- which are set to start easing from July -- in place for an extra one to three months, a delegate said. However, a proposal to bring OPEC+’s next meeting forward by a few days to June 4 still hasn’t been agreed upon amid wrangling behind the scenes.

Violent protests continued to rock the U.S., complicating its economic recovery from the coronavirus, with President Donald Trump promising to deploy the military to quell the unrest. Still, the riots have yet to have a major impact on financial markets and were balanced by data suggesting American manufacturing activity is beginning to stabilize at a depressed level.

Any changes to the existing OPEC+ deal will hinge on negotiations between Moscow and Riyadh, with Russia saying last week that it wanted to start winding down the cuts next month. The discussions are happening against what’s still a very uncertain demand backdrop. Road fuel consumption is slowly recovering as restrictions are lifted, but the restoration of air traffic will take much longer and the risk of a second wave of infections can’t be discounted.

West Texas Intermediate for July delivery rose 0.1% to $35.48 a barrel on the New York Mercantile Exchange as of 8:23 a.m. in Singapore. Brent for August delivery climbed 0.3% to $38.44 on the ICE Futures Europe exchange after advancing 1.3% on Monday.

Meanwhile, OPEC’s delivery of its production cutbacks, while strong overall, was undermined by its habitual laggards, suggesting the deal with be tough to enforce if prices keep rising. The group implemented around three-quarters of the cuts pledged in May, according to a Bloomberg survey. Yet performance was marred by Iraq and Nigeria, who executed less than half of their agreed reduction.

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