Following the delay on Friday to arrive at a consensus over what level of crude oil is to be pumped to the market in August , OPEC+ is continuing consultation among it members to have a meeting point.
Crude oil prices slid lower on Friday after OPEC+ said it would postpone a decision on the return of more barrels to the market for today.
Brent crude was trading at $75.76 a barrel on Friday and West Texas Intermediate was at $75.00 a barrel, amid an internal disagreement in the cartel, with the United Arab Emirates unsure about joining the agreement to add a total 2 million bpd to combined production between August and December.
On Thursday, before the meeting of the OPEC+ producers wrapped for the day, prices jumped on reports that Russia and Saudi Arabia had reached a preliminary deal to add more barrels to global supply.
The size of the proposed production increase was lower than most analysts had expected, coming in at an average monthly addition of 400,000 bpd, whereas expectations had been for 500,000 bpd.
But there is also a possibility that OPEC+ might not add any barrels to production.
“Failure to come to an agreement could mean that the group continues with current levels of production, which would mean that the market tightens even quicker,” commodity strategists from ING said in a note, as quoted by Reuters.
If this happens, however slim the chance, forecasts of Brent crude hitting $100 might come true. And while slim, the chance is still there as OPEC said earlier it expected the oil market to return to oversupply next year.
“OPEC+ is trying to follow the market, rather than lead the market,” IHS Markit vice chairman Dan Yergin told CNBC. “I think both the Saudis and the Russians see this in their interests. I think the Russians want to be sure that their aim is not to have the price so high that it brings back another flood of U.S. shale. They’re much more concerned about that than the Saudis are.”
“They’re just starting to get their heads above water with this price,” Francisco Blanch, Bank of America head of commodities, said, as quoted by CNBC. “My sense is the group wants to preserve these prices. They probably don’t want to push prices much higher right now.”