Oil’s turn in fortunes is prompting some US producers to open their taps again, just as OPEC+ producers head toward a consensus on extending output curbs.

But the rebound brings back concerns that Russia could again hesitate to extend output cuts, with rival shale producers signalling they are ready to re-open wells that have shut during the market’s collapse.

As an example, US driller Parsley Energy Inc. said it’s turning oil wells back on just weeks after shutting them off, illustrating the shale industry’s agility in responding to rising crude prices.

Stewart Glickman, an Energy Analyst at CFRA Research said: “If everybody magically decides to turn the taps back on and lets the oil back to the surface, now you’ve got 1.5 million to 2 million barrels a day that needs to find a home.”

Elsewhere OPEC members were still wrangling over when to hold their next meeting, against what’s still an uncertain demand backdrop. For now, Russia and several other OPEC+ nations are said to favour extending their current output cuts by a month.

It’s unclear if this will be enough for Saudi Arabia, though the proposal is within the range of the kingdom’s own call for a one- to three-month elongation.

Russian oil prices are surging, offering the country a timely reminder of why it’s helping OPEC and other producers to make the deepest output cuts in history.

The industry-funded American Petroleum Institute reported that supplies in Cushing, Oklahoma, fell by 2.2 million barrels last week. 

For more information visit www.opec.org

8th June 2020