At first the least controversial decision could be for the group to raise production by 300-500,000 barrels/day to meet the shortfall from Venezuela thereby bring the compliance back to 100% from the +150% seen in recent months. Futures are headed for a fifth straight session of declines, the longest such stretch since February 9.
Monday May 28 saw another price tumble for oil prices, after crashing down last Friday.
"The latest signal from OPEC and Russian Federation cooled down expectations for the group's cuts, which have been a major factor boosting crude price since late previous year", Satoru Yoshida, a commodity analyst at Rakuten Securities Inc., said by phone from Tokyo. The entire nation has been feeling the pinch but with the fuel prices no longer being regulated by the central government and the crude oil prices going up, the oil companies have their hands tied.
"I think the output reduction will not be as significant as many expect", RIA news agency quoted Novak as saying when asked if he agreed with an estimate that the sanctions could remove as much as 800,000 barrels a day from the market.
WTI, which did not trade during the Memorial Day holiday Monday, is down 7.6% since settling at $72.24/Bbl last Tuesday, its highest closing level since November 2014. The return above $1300/oz and more importantly a weekly close above $1307/oz, the 200-day moving average is likely to set the stage for additional gains.
The OPEC-led alliance has lowered stocks close to its goal much quicker than expected due to supply outages in Venezuela and strong compliance to the 1.8 million b/d output cut deal.
India and South Korea are the next biggest buyers in Asia, each lifting 6 million to 7 million barrels in June, sources tracking USA crude sales to Asia said.
Only Syrian army should be on country's southern border - Russian Federation
Moscow has also agreed not to try to stop Israeli bombing raids on Iranian bases and militias elsewhere in the country. The territory is covered by a ceasefire agreement signed a year ago between the US, Russia and neighbouring Jordan.
The spread between Brent and WTI CL-LCO1=R stands at around $8.7 a barrel, the widest since March 2015 due to the depressed price of USA crude compared to Brent.
"Only a few members have the capability to increase production, so implementation will be complicated", one OPEC source said. Oman's Oil Minister Mohammed Al Rumhi may join, they said.
New sanctions against Iran, which is the third largest producer in OPEC, are considered the most immediate threat to supply.
The upshot: Oil has played havoc with our currency market with the USD/INR pair plummeting all the way to 68 levels since April 2018.
United States energy companies added 15 rigs looking for new oil in the week ended May 25, bringing the rig-count to 859, the highest level since 2015, in a strong indicator that American crude production will continue to rise. This is prompting Saudi Arabia, Russia and other major producers to seriously consider gradually boosting production in an effort to stop the price rise from getting out of control.
Hedge funds trimmed their net-long positions - the difference between bets on a price increase and wagers on a drop - in Brent crude by the most in nearly a year.