(Bloomberg) — The historic oil-supply curbs by OPEC, Russia and other nations that helped spur May’s record price rally are hanging in the balance as the cartel and its allies dicker over when to hold their next meeting.
Oil futures settled slightly lower in New York on Monday amid mixed signals from the Organization of Petroleum Exporting Countries and its confederates about the timing of their next discussions. One idea floated is to bring the meeting forward by several days to Thursday to consider prolonging production limits for as long as three months, according to a delegate.
Without an extension, the existing caps begin to wind down next month — a schedule Russia so far prefers to stick to.
Meanwhile, onshore oil exploration in the U.S. shrank for the 11th consecutive week to a level not seen since before the shale revolution kicked off more than a decade ago. Despite well shut-ins across North America, U.S. imports of Saudi crude have surged, swelling supplies held in storage.
American stockpiles are “probably heading higher at least in the short term as more imports come in,” said Peter McNally, an analyst at Third Bridge Group Ltd. “The market is oversupplied to begin with. Everyone is looking for more signs of demand firming.”
West Texas Intermediate for July delivery settled down 5 cents at $35.44 a barrel on the New York Mercantile Exchange. Brent, the international benchmark, rose 48 cents to $38.32.
An earlier OPEC+ meeting would give the producer group more flexibility to change its current production limits. The group’s preference is to take short-term measures on cuts as the situation is volatile, the delegate said. The coalition — which includes OPEC’s 13 members plus another 10 exporters — has achieved 92% compliance, according to data analytics firm Kpler. Iraq and Nigeria have been laggards in meeting their pledged targets.
Meanwhile, the U.S. Oil Fund ETF begins its monthly roll of futures contracts on Monday. The fund plans to sell its July holdings and buy more November and January futures over the next 10 trading sessions.
Other oil-market news:
- Offshore drilling firm Valaris Plc has missed interest payments on $1.1 billion of bonds that were due on Monday, the company said in a filing.
- Traders betting on oil’s recovery face a reality check following a collapse in profits from making diesel in Europe and the U.S.
- WisdomTree Investments Inc. is looking to protect its biggest financial oil product from any renewed plunge into negative territory by implementing a price floor.
- Queues of tankers have formed off China’s busiest oil ports as the vessels wait to offload crude for refineries that are quickly ramping up production amid a rapid rebound in fuel demand.
–With assistance from Elizabeth Low, James Thornhill, Grant Smith and Alex Longley.
To contact the reporters on this story:
Olivia Raimonde in New York at email@example.com;
Hailey Waller in New York at firstname.lastname@example.org
To contact the editors responsible for this story:
Simon Casey at email@example.com
Joe Carroll, Steven Frank