Tweet of US Secretary of Energy 1
Investing.com – It is the first contact between a senior US Energy Department official under President Joe Biden and his counterpart in Saudi Arabia, the world’s largest oil producer and exporter.
US Energy Secretary Jennifer Granholm said on Twitter that she had telephoned Saudi Energy Minister Prince Abdulaziz bin Salman.
This is to reaffirm the importance of international cooperation to ensure reliable and affordable energy for consumers, according to Granholm’s tweet.
This is the first telephone conversation with Saudi Arabia by a US official prior to the OPEC meeting since US President Joe Biden took office.
The United States said during its communication with the Kingdom that energy should be kept at affordable prices.
Prince Abdulaziz bin Salman, Minister of Energy, said that the cautious position of “OPEC Plus” was the right choice, adding that the recovery is still incomplete.
The Saudi Energy Minister added, during his speech at the meeting of OPEC and the producing countries from outside it, that caution must be continued in order for the recovery to take place.
Prince Abdulaziz bin Salman said that OPEC + continues to meet the needs of the market and will work to find solutions.
Prince Abdulaziz bin Salman said, when opening the OPEC + meeting last month, that a cautious and restrained approach must be taken.
During those moments, according to sources, it appears that OPEC + has agreed to gradually reduce production cuts, starting from next May.
A source in OPEC + stated that “a majority within the group supports the extension of the oil production cut by one month,” according to Reuters.
On the other hand, the sources said that the gradual easing of OPEC + oil production cuts covers May-July.
OPEC + agreed earlier last month to cut production by more than 7 million barrels per day to support prices and reduce excess supplies.
This comes in addition to Saudi Arabias voluntary reduction of its production of one million barrels per day for two consecutive months in February and March.
The price decreased by 3.9% during the month of March, while it rose by 23% in the first three months of 2021.
While West Texas fell 3.8% during the month of March, while it rose 22% during the first quarter of this year 2021.
The increase was driven by several factors including the bad weather conditions that hit Texas, which led to the disruption of many of the refineries (SE :).
This coincided with the acceleration of vaccinations against the Coronavirus, which raised hopes about a speedy economic recovery and getting out of the repercussions of the closure and the increase in demand.
What fueled prices at the end of last March was the suspension of the transit of oil tankers in the most important waterway in the world for about 5 days, after a Japanese ship ran aground in the Suez Canal.
OPEC + lowered its forecast for oil demand growth in 2021 by 300,000 barrels per day, in light of concerns about the market’s recovery amid new closures to combat the Corona virus.
Despite the continued disposal of OECD commercial stocks, they are still above the 2015-2019 average.
The committee expects oil demand to grow by 5.6 million barrels per day this year, down 300,000 barrels per day from its previous forecast.
JPMorgan said in a research note that it believed OPEC + would be careful when it meets this week by extending most of its production cuts until the end of May.
GB Morgan (NYSE 🙂 added that Saudi Arabia will extend its voluntary cut for another two months until the end of June.
“We expect the alliance to start adding production through increases of 500,000 barrels per day, starting in June and continuing in August,” he said before the OPEC + meeting on Thursday.
The bank said Saudi Arabia was likely to reverse its voluntary 1 million bpd cut in July, in two batches of 500,000 bpd each.
Nymex crude is trading during those moments before the OPEC + meeting, up 2% at $ 60.25 a barrel, while Brent crude is trading 1.7% higher at $ 63.8 a barrel.