TOKYO – Oil prices gained slightly on Tuesday after the previous day’s advance, boosted by expectations of a tighter market after OPEC+ nations’ output talks were canceled, but gains were limited by concerns that members would begin to increase production. After gaining 1.3 percent on Monday, Brent crude was up 7 cents, or 0.1 percent, at US$77.23 a barrel at 0052 GMT.
WTI oil futures in the United States were trading at US$76.38 a barrel, up US$1.22 or 1.6 percent from Friday’s close, after trading through a US vacation to honor Independence Day without a settlement.
After clashing last week when the United Arab Emirates rejected a planned eight-month extension to output cuts, oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, broke off oil output negotiations and established no new date for them to resume.
“Expectations of OPEC+ not adding extra supply to the market from August lent support on Monday,” said Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co. “However, investors are not keen to move in either direction from here due to uncertainty over actual actions by the OPEC+ members from next month,” he added.
Ihsan Abdul Jabbar, Iraq’s oil minister, stated on Monday that his country is dedicated to the current deal with OPEC and its partners, and that he does not want to see oil prices rise above current levels in order to maintain stability.
He also stated that he hopes to have a date for the next meeting in ten days.
To deal with a COVID 19-induced price drop, OPEC+ committed to historic output cuts in 2020.
The producers have been progressively loosening the output constraints, but the UAE opposed a deal on Friday to increase output by around 2 million barrels per day (bpd) from August to December 2021 and extend the pact on a series of incremental output changes through the end of 2022.
“The stumbling block is the UAE’s output levels under more typical conditions. This is an issue that we expect OPEC to fix before the existing deal expires in April 2022 “According to a report by Alan Gelder, vice president of Wood Mackenzie.
“However, these debates are likely to be difficult and lengthy.”
(Yuka Obayashi contributed reporting, and Muralikumar Anantharaman edited the piece.)/n
