WTI oil trades higher, still, demand for Brent collapsed

Increased demand for oil resulted in another significant rally. Brent prices climbed up by 1.27% at $36.03 per barrel. 

The world’s significant oil producers, Saudi Arabia and Russia, agreed to reduce their crude oil production by almost 10 million BPD in April.

Speculators kept keen, buying interest in energy and metals at the expense of the agriculture sector. Ole Hansen, head of the commodity strategy at Saxo Bank, said that the top three buys were WTI crude oil, gold, and natural gas, while corn, soybeans and wheat topped selling.

The analyst says that another substantial rally in crude oil was observed. Namely, the combined net-long in WTI and Brent climbed by 26,000 lots to 507,000 lots, a 16-week high. Hansen stated that five consecutive weeks of purchasing has resulted in bullish WTI oil bets increasing almost three-fold. 

OPEC+ members are hoping for deeper oil production cuts

Hansen also mentioned that buying interest in Brent crude oil has been much more softened. 

Traders are looking ahead to the next meeting of the members of OPEC+ and its allies, including Russia. The oil-producing countries’ members agreed to revise production cuts and extend them if it would be needed. Saudi Arabia and some OPEC members are already considering extending output reductions further. They have not won support from Russia as of yet.

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Russia held a meeting to discuss the future of the OPEC agreement

Three Russian officials declared that the nation’s position is to stick to the plan. Dmitry Peskov, the Kremlin spokesman, stated that the deal had been undoubtedly successful. Before deciding on the June 9-10 meeting, Peskov said that countries would look at how the situation develops.

The historic April deal ended a price war between Russia and Saudi Arabia. It helped to reduce the global excess of oil and supported a recovery in crude prices. Even though prices have recovered since then, having the black gold at these production levels is a blow for Moscow’s budget.

Russian oil producers, talking with Energy Minister Alexander Novak, discussed the future of the OPEC+ agreement on Tuesday. They considered the possibility of increasing the most significant reductions for another two months. The discussion followed Saudi Arabia’s reports about extending production cuts. According to Russian newspaper Kommersant, the meeting did not reach a consensus. The country preferred a traditional approach. Russia favours to wait and see before OPEC+ meetings and often agrees to the proposals of its partners at the last moment.