Oil prices surged after OPEC+ stuck to its plan

Oil prices surged on June 2 after OPEC+ stuck to their plan to bring back oil supply to the markets in June and July. Notably, the group is anticipating a robust rebound in demand in the United States and China, the world’s two largest oil consumers.

U.S. West Texas Intermediate crude futures boosted by 7 cents, which equals 0.10%, and settled at $67.79, extending a 2.1% gain following the Memorial Day holiday in America on May 31. Rates soared to their highest since October 2018.

Meanwhile, Brent crude futures rose by 17 cents, or 0.24%, and traded at $70.42 a barrel, after increasing 1.3% overnight, when it reached its highest since March 8.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed on June 1 to keep to their plan to gradually ease supply curbs through July.

Notably, the next OPEC+ will be held on July 1.

At a meeting on April 1, the group of producers announced it would raise daily oil production by 350,000 barrels in May, 350,000 barrels in June and by 441,000 barrels in July. Saudi Arabia also announced it would roll back its voluntary output cut by 250,000 barrels a day in May, 350,000 barrels a day in June, and by 400,000 barrels a day in July.

The market will see stock drawdowns between September and the end of 2021

Remarkably, Saudi Energy Minister Prince Abdulaziz bin Salman’s comments after the meeting buoyed the market. He stated he saw a solid demand rebound in the United States and China and added that the pace of vaccine rollouts can only lead to further rebalancing of the global oil market.

According to ING Economics analysts, the market seems focused on the more constructive outlook for later this year, with OPEC+’s view that the market will see significant stock drawdowns between September and the end of 2021.

ING also announced that including extra cuts by Saudi Arabia tapering off through July, the producer group will be returning 700,000 BPD in June and 840,000 BPD in July.