Market oil prices show a downward trend, as investors anxiously anticipate the decision on production levels from OPEC+
In a significant development, eight members of the OPEC+ alliance are set to discuss raising oil production levels at a meeting scheduled for this Sunday. The alliance, which includes OPEC countries, Russia, and other allies, currently produces about half of the world's oil.
If the production increase is approved, OPEC+ would be starting to unwind a second layer of output cuts of about 1.65 million barrels per day. This would be more than a year ahead of schedule, as the cuts were initially planned to remain in place until the end of 2022.
The decision to consider a further increase in production would aim to regain market share, as these eight members plan to raise output by 137,000 barrels per day. This move comes amidst global oil market fluctuations and rising prices.
However, the unwinding of the second layer of output cuts could potentially push global oil prices higher, especially if Russia, a key player in the alliance, reduces its crude exports. A cut in Russia's crude exports could have a significant impact on global oil markets, given that the second layer of output cuts equates to approximately 1.6% of world demand.
U.S. President Donald Trump has also urged European leaders to stop buying Russian oil, which could further impact global oil prices and supply.
As of now, Brent crude futures are at $66.77 per barrel, while U.S. West Texas Intermediate crude is at $63.29 per barrel. Last week, U.S. crude storage experienced a surprise build of 2.4 million barrels, according to official data, although the American Petroleum Institute industry group reported a smaller rise of around 600,000 barrels.
Analysts had estimated a 2-million-barrel draw in a poll, but the actual increase was higher, indicating a tightening U.S. crude market.
The sources for this information are two individuals familiar with the discussions taking place within OPEC+. The outcomes of the Sunday meeting will undoubtedly shape the global oil market in the coming months.
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