Crude settles above $75 as Opec+ dithers on output policy

Oil rose to multi-year highs in June, with WTI gaining 9.2% after rising to its highest level since October 2018

Austrian policemen guard the entrance to the headquarters of Opec in Vienna, Austria. Opec+ will convene its ministerial meeting on July 5 at 3pm Vienna time. AFP

Oil prices narrowed their spread and rounded off the week higher as Opec+ adjourned a long-drawn out meeting over future production increases.

Brent, the international benchmark under which two thirds of the world's oil is traded, and West Texas Intermediate, the main US gauge, gained about 1 per cent during the trading week after bridging their spread and trading above $75 a barrel.

While WTI remained flat to settle at $75.24 a barrel, Brent prices increased by 0.53 per cent higher to $76.24 a barrel on Friday.

The crude benchmarks rose to multiyear highs in June, with WTI gaining 9.2 per cent during the month as it climbed to its highest level since October 2018.

Oil prices remained uncertain on Friday at the close of trading as Opec+, which is undertaking market corrections, adjourned yet another meeting.

The group, which is led by Saudi Arabia and Russia, failed to reach consensus on Thursday and Friday during a ministerial gathering that followed a joint ministerial monitoring committee meeting.

Opec+ is facing questions from major producers on the extension of current production curbs beyond April 2022.

Other members have called for a revision of the group's current baseline for calculating production quotas.

The group is looking to ease its current curbs and bring 2 million barrels per day back to the markets by the end of the year.

Growing demand for energy around the world – as economies relax Covid-19 mobility restrictions – has caused prices to rise by about 50 per cent from the beginning of the year.

“To produce more oil is what Opec+ wants as well – the proposal yesterday was to boost output by two million bpd until the end of the year – albeit in a controlled and cautious way, with a conservative 400,000 bpd production increase in August to start,” said Louise Dickson, an oil markets analyst at Rystad Energy.

“A production increase of up to 500,000 bpd in August would be an actually bullish development when compared with the demand sharp rise that the summer is bringing.”

Opec+ is considering a "gradual production increase" amid possible inoculation delays worldwide and the spread of a new and highly virulent coronavirus strain.

The producer group will convene its ministerial meeting on July 5 at 3pm Vienna time.