Oil prices remained steady on Monday edging up slightly in thin trading due to holidays in Singapore, London and New York, and as the market awaits a new round of OPEC meetings just two weeks away.
Global benchmark Brent rose to $35.81 a barrel by 16:59 GMT, while United States West Texas Intermediate (WTI) crude was flat at $33.74 a barrel. There was no US settlement because of the Memorial Day holiday.
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Despite the recent uptick in global and US crude prices, Brent and WTI still remain down approximately 45 percent from their pre-coronavirus pandemic peaks earlier this year.
The Organization of Petroleum Exporting Countries and its allies, a grouping led by Russia and known as OPEC+, are due to hold an online conference on June 9. Analysts believe the gathering is likely set the pace of crude price recovery for the latter part of 2020.
Russia’s Energy Minister Alexander Novak struck an optimistic tone on Monday, emphasising that he sees global crude demand and supply balancing out in the next two months.
“For now, the surplus stands at around seven to 12 million barrels per day. The energy ministry is counting on the market to balance out in June-July thanks to a consumption increase,” the ministry quoted Novak as saying at a state council meeting on energy.
The minister also said supply has already dropped by 14 to 15 million barrels per day (bpd) thanks to the OPEC+ deal and output cuts in other countries.
OPEC+ agreed last month to cut their combined output by 9.7 million bpd, or roughly 10 percent of global production. The cartel and its allies expect other large oil producers, such as the US, Canada and Norway, to commit to additional cuts.
The Russian energy ministry considers non-OPEC+ countries to have already cut output by 3.5 million to four million bpd, according to RIA news agency, which also said that Russian oil output volumes were near the country’s target of 8.5 million bpd for May and June.
Production in the US is down, as well. The total horizontal oil rig count or actual drilling activity – widely considered an important indicator of future output and consumer confidence alike – fell to 218 rigs last week, a 65 percent decline from its mid-March peak, according to data from energy services firm Baker Hughes.
“Most of the production that was to be shut is now already shut, and producers count down until the day they will be able to recover some of the output that’s put on ice,” Rystad Energy wrote in a note on Monday. “It is going to be a slow path to recovery, though.”
Tensions between Washington and Beijing, the world’s largest oil consumers, over trade, human rights, the coronavirus pandemic, and Beijing’s plans to impose security legislation on Hong Kong are creating concerns about the outlook for a crude recovery.
Meanwhile in the Caribbean, the first of five Iranian tankers carrying fuel for petrol-starved Venezuela entered the South American country’s exclusive economic zone on Saturday, despite warnings from the US. Both Iran and Venezuela are under US sanctions.
The tanker, named Fortune, reached Venezuela’s waters after passing north of the neighbouring dual-island Caribbean nation of Trinidad and Tobago, according to vessel-tracking data from Refinitiv Eikon.
Venezuelan state television showed images of a navy ship and aircraft preparing to meet it. Nicolas Maduro’s government pledged that its military would escort the tankers once they reached Venezuela’s waters.
The flotilla is carrying a total of 1.53 million barrels of petrol and alkylate to the Latin American country, according to calculations by TankerTrackers.com.
Washington is considering measures in response, a senior US official on Monday said without elaborating.