(Bloomberg) — Oil swung back and forth as OPEC+ was said to have agreed to a gradual hike and the market awaited the details of its output agreement.
Futures were little changed in New York after flipping between gains and losses. Delegates said the Organization of Petroleum Exporting Countries and its allies agreed to resume gradual monthly hikes and continue to discuss details. Saudi Arabia had proposed gradual monthly oil-production increases and a phased rollback of its unilateral output cut of 1 million barrels a day, according to delegates.
U.S. Energy Secretary Jennifer Granholm called her Saudi counterpart Prince Abdulaziz bin Salman on the eve of the meeting to highlight the importance of “affordable energy,” adding more uncertainty into OPEC+ output policy.
While the rollout of coronavirus vaccines and supply curbs underpinned a fourth quarterly gain for crude, the rebound has faltered in recent weeks on concern that near-term consumption is at risk, particularly in Europe where France is heading for a month-long lockdown. Mohammad Barkindo, secretary-general of the Organization of Petroleum Exporting Countries, pointed this week to the market’s recent volatility as “a reminder of the fragility facing economies and oil demand.”
See also: OPEC+ Focuses on Fragile Demand Before Talks on Oil Output
“A decision to delay an easing in current levels of production restraint would increase the tightness in the second-quarter and potentially boost prices ahead of the peak summer demand season,” said Ann-Louise Hittle, vice president for macro oils at Wood Mackenzie.
Data from the U.S. and Asia do bolster the case for OPEC+ to loosen the taps. Americans are driving and flying the most since the pandemic began, U.S. refineries are processing the most oil since early March last year, and the nation’s stockpiles have shrunk for the first time in six weeks.
In Asia, Japan’s large manufacturers have turned optimistic for the first time since the fall of 2019, while South Korea’s exports have risen the most in more than two years. Indian gasoline sales topped 2019 levels in March, though diesel sales were lower.
Elsewhere the picture is weaker. In Europe, France’s four-week lockdown begins on Saturday, while Italy and Germany have extended partial shutdowns. The Canadian province of Ontario, home to Toronto and the capital Ottawa, will be locked down for 28 days, CBC News said. And in South America, Brazil detected a new Covid-19 variant as it again saw record deaths.
“The global picture is mostly a bright one in terms of the economy and oil demand, and there are a few spots like Europe that may be in trouble,” said Michael Lynch, president of Strategic Energy & Economic Research. “But compared to what we saw last year, it looks like we’re still on an upward trajectory for demand and possibly prices.”
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.