OPEC’s Joint Ministerial Monitoring Committee (JMMC) will meet on Tuesday and Wednesday to recommend the next level of cuts after compliance in the group hit 107% in June, up from 77% in May.
Record high inventories in the US and a second wave contagion around the globe have added speculation that OPEC+ might yet throw a surprise decision this week by extending the 9.6 million b/d output cuts by a further month, however analysts at OCBC dubbed this latest scenario unlikely as prices have almost doubled from lows in April.
The OPEC+ Joint Ministerial Monitoring Committee will decide on July 15 whether to extend 9.7 million b/d production cuts that expire end July by another month. However, as major economies showing signs of recovery, according to Platts sources familiar with the negotiations are indicating that an extension is unlikely, which will see OPEC+ moving ahead as planned to a 7.7 million b/d cut in August.
According to Bloomberg, Saudi Arabia gave at least five Asian customers less August-loading crude than they had sought, while six other Asian buyers received full allocations, whereas at least two Indian customers that sought less supplies compared to their contractual volumes got roughly what they asked for.
On another note, higher prices have prompted some U.S. producers to start drilling again even as the number of operating oil and natural gas rigs hit a record low for a 10th straight week, potentially adding supply-side uncertainty at an extremely critical point in the oil price recovery phase.
Elsewhere, Libya lifted a force majeure on oil loadings July 10, but on Sunday the Libyan National Army allegedly under instruction by the United Arab Emirates vowed to maintain a blockade until its demands are met.
As Libyan production has been reduced to 70,000-100,000 bpd in recent months from more than 1.1 million bpd before the blockade was imposed in January, any short term increase in production could erode the OPEC+ driven gains of oil prices from their nadir in April.