Oil edged lower before this week’s OPEC+ committee meeting, which may confirm the group’s intention to taper production cuts even as the coronavirus surges in many countries.
Futures in New York fell to near $40 a barrel. The cartel will review the market at an online meeting on Wednesday amid expectations it will begin unwinding historic supply curbs as planned in August. Russia’s top producers are preparing to increase output next month in the absence of other guidance from the Energy Ministry, according to two people from the industry who spoke on condition of anonymity.
The increase in supply would come as the US struggles to control the coronavirus outbreak, clouding the demand outlook. Similarly, in India, the world’s fastest growing energy consumer, more than 50,000 new cases were reported over the weekend.
“It seems like OPEC+ will stick with the plan of a bit more production in August,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “With record high inventories it is understandable that the market is not all that positive about an additional 2 million barrels a day or so of supply.”
The Joint Ministerial Monitoring Committee, the panel that reviews the OPEC+ deal, will consider whether the alliance should keep 9.6 million barrels of daily output off the market for another month, or taper the cutback to 7.7 million barrels as originally planned. Members are leaning toward the latter option, according to several national delegates who asked not to be identified.
Saudi Arabia, meanwhile, gave at least five Asian customers less August-loading crude than they had sought, said people with knowledge of the companies’ procurement. Six other Asian buyers received full allocations, while at least two Indian customers that sought fewer supplies than contracted got roughly what they asked for.