Russia’s President Vladimir Putin and his U.S. counterpart Donald Trump discussed the OPEC+ deal, just days before the producers’ alliance meets to discuss the future of its output cuts. “It has been stated that the multilateral agreement reached with active support of U.S. and Russian presidents has been leading to a gradual recovery of oil demand and price stabilization,” the Kremlin said in a statement Monday about the call. The Organization of Petroleum Exporting Countries and its partners, including Russia, will meet this week or next to discuss whether to extend their current oil-production cuts, or allow them to taper from July 1. The U.S. did not formally join the deal, but Trump helped to broker it and the country’s production has dropped significantly as shale producers shut down wells due to low prices and weak demand. The alliance has agreed to collectively curb output by a record 9.7 million barrels a day in May and June to offset the impact on oil demand of coronavirus lockdowns. Saudi Arabia and its Gulf allies, who have made additional voluntary supply cuts, favor maintaining the curbs at their deepest level for an extra one to three months, according to a delegate. While crude prices have rallied recently due in part to a stronger-than-expected rebound in demand, the global oil market is vulnerable to the risk of a second wave of coronavirus infections. Also, at about $35 a barrel, prices are below what most OPEC+ countries need to cover planned government spending. Nick Note: what they seem to forget to tell you is the fact that OPEC Compliance With Output Cuts Was Only 74% In May. Not even a full month into OPEC’s deep production cut agreement, rumors have already surfaced that there is a difference of opinion over a possible extension of the oil production cuts—as usual, with Saudi Arabia on one side and Russia on the other. According to the survey data, Nigeria and Iraq did not live up to their commitments under the massive production cut deal that promised to take 9.7 million barrels of oil production per day out of the oversupplied market.
Overall, the survey showed the group cut just 5.91 million bpd from April levels, producing 24.77 million bpd. This is 4.48 million bpd of the promised reduction, or 74% compliant.
For May, Iraq reached just 38% compliance with its promised cuts. Nigeria was even less faithful to the quotas, cutting just 19% of what it promised, according to the Reuters survey. The sharp cuts in May, however, are watered down by the fact that several OPEC members, including Kuwait, the UAE, and Saudi Arabia, produced record-high volumes in April, which flooded the market while the world was beginning to see what was a massive drop off in demand. Nick Note: I do not trust this oil rally at this point. It would not take much for me to short it. I expect a pop after OPEC+ announce a continuation of the production cheating half/production cuts. The riots, consumer apprehension and the fact that business’s are not opening up as expected tells me the oil rally and stock market rally are on hold for now…. I’ll let you know as soon as i scratch my ass and figure it out.