Oil fell about 3 per cent after Saudi Arabia said an extension of output cuts by OPEC+ nations would not include additional voluntary reductions by a trio of Gulf producers. After rising for seven consecutive session, Brent oil futures fell $1.30, or 3.1%, to $41.00 a barrel. U.S. West Texas Intermediate crude (WTI) , meanwhile, fell $1.35, or 3.4%, to $38.20. Both benchmarks rose to their highest since March earlier in the session with WTI topping $40 a barrel. Crude oil traders said India’s IOC picked up at least six cargoes of West African crude from Shell, Chevron, Exxon Mobil and Vitol.
Traders said these were likely all July loading although IOC had issued two tenders last week seeking cargoes for July 4-13 and Aug. 1-10 loading. A few grade details emerged. Shell was said to be providing Forcados and Bonga, Chevron a cargo of Agbami and Vitol another cargo of Bonga. Around 30 July loading Nigerian cargoes were still available. Cameroon’s state oil firm sold a cargo each of Kole and Lokele via tender. According to the report Unipec took the cargo of Kole but details on the second grade did not immediately emerge. BP will cut about 15% of its workforce in response to the coronavirus crisis and as part of Chief Executive Bernard Looney’s plan to shift the oil and gas major to renewable energy, it said on Monday. Saudi Arabia will boost output in July to match its output OPEC quota while ending deeper, voluntary cuts amid signs of global demand recovering, the Saudi energy minister said.
The Organisation of the Petroleum Exporting Countries, Russia and other producers – a group known as OPEC+ – agreed in April to cut supply by 9.7 million barrels per day (bpd) in May and June in an effort to prop up prices as coronavirus travel restrictions caused demand to collapse.
The OPEC+ producers agreed on Saturday to sustain those cuts, equal to about 10% of global supply, through July. After the extension was agreed, top exporter Saudi Arabia increased its monthly crude prices for July. However, Saudi Energy Minister Prince Abdulaziz bin Salman told a news conference on Monday that the kingdom and Gulf allies Kuwait and the United Arab Emirates would not cut by an extra 1.18 million bpd in July as they are doing this month.
Those cuts were in addition to the 9.7 million bpd OPEC+ plan.
“It would be too good to be true to have a total of nearly 11 million bpd in voluntary cuts extended for a month at times when we see supply deficits,” said Bjornar Tonhaugen at Rystad Energy.
Low prices have prompted Chinese buyers to boost imports, with purchases by the world’s largest crude importer hitting a record high of 11.3 million bpd in May. Analysts said higher oil prices could discourage buying and undercut the fragile recovery demand while prompting U.S. shale drillers to return to reopen wells.
Meanwhile energy companies have begun preparations to resume oil and gas production in the U.S. Gulf of Mexico, a day after Tropical Storm Cristobal blew through with high winds and heavy rains. Producers had evacuated 188 offshore facilities and shut in wells producing 635,000 barrels per day of oil and 878 million cubic feet per day of natural gas at U.S. Gulf of Mexico wells as of Sunday. Royal Dutch Shell Plc and Murphy Oil Corp said on Monday they were starting to return workers to offshore facilities. Murphy said it did not expect to find storm damage and Shell said there was no hit to its production. Energy companies typically inspect platforms after a storm passes and return evacuated workers once it is safe to do so.
Cristobal has weakened to a tropical depression after making landfall in Louisiana on Sunday with 50 mile-per-hour (80 kph)winds. It led producers to shut 34% of oil and 32% of gas output in the Gulf of Mexico, offshore regulator Bureau of Safety and Environmental Enforcement said. The region provides about 1.93 million bpd of oil. Exxon Mobil Corp, Shell and PBF Energy Inc kept their oil refineries in Louisiana in operation as Cristobal hit over the weekend, people familiar with operations said. PBF declined to comment. Exxon and Shell were not immediately available to comment. Exxon’s 502,500 bpd Baton Rouge, PBF’s 190,000 bpd Chalmette and Shell’s 225,300 bpd Norco, Louisiana, refineries were operating normally on Monday, the sources said. The storm was 15 miles (30 km) east of Monroe, Louisiana, at 10 a.m. on Monday and dropping up to 10 inches (25.4 cm) of rain on central and eastern Gulf Coast areas. It should move through Arkansas and Missouri on Monday and Tuesday, U.S. National Hurricane Center forecasters said.
