Oil, shares celebrate the US agreement and await the OPEC+ decision
Oil-related stocks such as Saipem, Eni and Tenaris finished the week on a strong note with significant gains. After days of decline, they have reawakened thanks to the signing of the agreement on the debt ceiling by the United States and awaiting the decisions of the OPEC+ producers, whose meeting is taking place this weekend and will close tomorrow. The meeting is important because it will discuss whether to further reduce oil production to support the price. Four alliance sources said OPEC+ is unlikely to expand output cuts at their ministerial meeting on Sunday and this despite oil prices falling towards $70 a barrel.
However, these price levels are not at all comfortable for OPEC+ members, according to Ole Hansenhead of commodity strategy at Saxo Bank, and failure to take action to support prices at the meeting could push oil prices further down.
OPEC+, which includes OPEC and Russia-led allies, accounts for approx 40% of the world‘s oil and supplies about 60% of the oil export market. Therefore, the group’s decisions can have a significant impact on oil prices.
Almost 4 million barrels per day have already been cut
Between the voluntary cuts by some countries and those by the cartel, the total production cuts rose to 3.66 million barrels per day, or about 4% of global consumption. Measures taken as a result of capacity limitations of manufacturers such as Nigeria and Angola. An investigation Reuters in fact, he noted that the two countries they missed their production targets by a total of 600,000 barrels per day in Maywhile the outages in the region of the Kurdistanin northern Iraq caused the country to produce 220,000 barrels a day less than its target last month.
But the unknown China hangs over the future trend of oil prices. “With the prospect of a US default now looking very unlikely, markets have breathed a sigh of relief, which has translated into greater appetite for risk, offering support to oil prices. However, any gains appear limited by the lingering concerns about demand from China», warns Ricardo Evangelista, senior analyst at ActivTrades, noting that the manufacturing activity of the world‘s largest oil importer decreased in May (the manufacturing PMI fell to 48.8 in May from 49.2 in April ), reinforcing expectations of an economic slowdown in the country and hampering the outlook for crude oil demand