Some recent statements from OPEC+ producers have been contradictory, creating uncertainty about the outcome of the next meeting.
Last week, oil prices were propped up when the Saudi energy minister cautioned investors against betting on lower oil prices.
This led some to speculate that OPEC+ might consider implementing more output cuts in their June meeting.
It now appears that OPEC+ producer’s profits are being affected by the recent decline in oil prices.
Prior to Prince Abdulaziz’s remark, President Vladimir Putin stressed the necessity of oil production cuts to maintain a higher price level.
US Debt Ceiling Deal Impacted Energy
Despite the initial drop, oil price losses were limited later in the trading week leading into the holiday weekend due to optimism surrounding a potential deal between US President Joe Biden’s administration and top congressional Republican Kevin McCarthy.
The deal aimed to reduce spending and raise the government’s debt ceiling, which currently stands at an astounding all time high of $31.4T.
Meanwhile in Russia
Russian Deputy Prime Minister Alexander Novak does not expect any new measures to be taken by the OPEC+ group of oil producers at their upcoming meeting in Vienna on June 4.
His comments come after careful consideration for the group’s implementation of significant output cuts just earlier this year.
He attributed the lack of further oil price increases to surging U.S. interest rates and a slower-than-expected Chinese Covid-19 economic recovery.
It was just this past April that OPEC+ members announced cuts of over one million BPD (barrels per day) in response to falling crude prices.
Novak expressed optimism that Brent prices on the other side of the pond would exceed $80 per barrel by the end of the year.
He emphasized that current prices around $75 reflect the global macroeconomic situation.
Additionally, he hoped for an increase in oil demand by the summer but clarified that the goal is to achieve a balance rather than inflate prices.
Russian President Vladimir Putin also indicated that no action may be necessary at the next OPEC+ meeting as energy prices approach economically justified levels.
Short Sellers Warned of Consequences Ahead of OPEC+ Meeting
Saudi Arabia’s Energy Minister, warned short sellers of more consequences and urged them to be cautious ahead of an upcoming OPEC+ meeting.
Speaking at the Qatar Economic Forum, he stated that speculators would face repercussions and referenced their losses in April. Short sellers bet on declining oil prices and are forced to close their positions at a loss when OPEC+ unexpectedly reduces production, leading to a price rally.
Some independent analysts have noted that short speculative positions are as bearish as they were at the start of the pandemic, increasing the likelihood of further production cuts during the OPEC+ meeting.
Prince Abdulaziz emphasized that despite criticism, the alliance would continue to be proactive and hedge against future uncertainties.
He criticized the United State International Energy Agency (IEA) for its inaccurate forecasts, blaming it for market volatility.
The IEA recently upgraded its forecast for 2023 oil demand, predicting a supply shortage in the second half of the year.
The Bottom Line
The OPEC+ meeting is scheduled for June 4 in Vienna and regardless of the choices made at that meeting, there’s nothing we can do about it!
However, what we can do is trade it. Both long and short, on an intraday basis. We really don’t give a hoot which way it goes!
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