OPEC+ Pushes Back Meeting Hitting Prices

The Mexican crude basket’s 4.05 percent rise in price yesterday is set to disappear if WTI and Brent prices are followed. During today’s trading, both WTI and Brent have seen their values fall after concerns of “quota-cheating” were raised, reports Bloomberg. The end price of the Mexican basket will not be available until PEMEX releases its data this evening. But the US$1.26 dollar climb to US$32.40 per barrel may well retreat.

According to Bloomberg, OPEC+ will not be holding the meeting scheduled for tomorrow and another meant for next week because not all nations that agreed to be part of the historic 9.7MMb/d production cut have fulfilled their end of the bargain. The meetings were intended to be held so that nations could discuss extending the production cut measures which have had success in rebalancing oil prices following their drop below zero.

Yesterday, prices had jumped again in reaction to the rumors circulating that nations were about to formalize the extension of output reductions. This was likely to be done in tomorrow’s scheduled meeting, sources reported. However, with this meeting likely off the table, traders’ concerns are pulling prices down.

Brent had pushed above US$40 per barrel for the first time since March but fell 1 percent and back below the US$40 mark following concerns, says Bloomberg. Likewise, WTI lost 0.4 percent of its value. Nigeria and Iraq appear to be the culpable parties, having both released statements yesterday saying that they were taking measures to ensure they would achieve the targets stated in last months’ OPEC+ meeting.

The setback comes after a very strong performance for oil prices in May. As reported yesterday, last month saw huge gains across the board with the Mexican crude basket jumping 138.96 percent in value. This was driven by OPEC+ production cuts, which is helping to reduce the glut of oil built during the COVID-19 pandemic and to stabilize levels in storage terminals around the world.

This situation is also being helped by the reopening of many global economies. Mexico began its transition to the “new normal” on Monday as 18,560 companies from three major sectors began production again. Countries including China, South Korea and Japan, among the first countries to record the virus, are in the process of reopening. So, too, is New Zealand, which crushed the curve by enforcing heavy quarantine measures that the population followed. In Europe, Italy is also beginning a slow process of reopening after the devastation that COVID-19 brought to its shores.