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Oil price up as Opec+ delays talks on production cuts

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·3-min read
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View of the pumpjack in the oil well of the oil field. The arrangement is commonly used for onshore wells producing little oil. Pumpjacks are common in oil-rich areas.
Opec+ is deciding if it wants to continue increasing crude supplies, as global demand bounces back from the coronavirus pandemic. Photo: Getty Images

Oil prices ticked up as OPEC and its allies (Opec+) postpone talks by a day to allow more time for a compromise on supplies.

OPEC+, led by Saudi Arabia and Russia, is deciding if it wants to continue increasing crude supplies, as global demand bounces back from the pandemic.

Russia, which faces less budgetary pressure to sustain high prices than many of its Middle Eastern nations, is weighing a proposal to boost output. Saudi Arabia may want a more gradual approach.

“It's not the first time the two leaders have gone into the meeting with different stances – and they tend to hash out a compromise. One delegate predicted the same would happen this time,” said a Gulf News report.

Barron's said that many expect an increase in oil supply which could make crude prices, which have stalled recently, drop.

Brent futures (BZ=F) were up 0.7% to $75 (£54) and crude futures (CL=F) were 1% higher to $73.

Brent futures ticked up on Wednesday. Chart: Yahoo Finance UK
Brent futures ticked up on Wednesday. Chart: Yahoo Finance UK

The OPEC+ meeting is going to take place on 1 July. It was supposed to convene its advisory body, the Joint Ministerial Monitoring Committee, on Wednesday. That session will now take place on Thursday, the same day as the main policy meeting.

"The crucial meeting will provide traders with hints about the future direction of oil supply," said Naeem Aslam, chief market analyst at Ava Trade.

He said so far member countries have kept a close eye on the price changes caused by the agreed-upon production cuts. 

"The constraints on supply of oil are expected to be eased as a result of the rise in oil prices, which is caused by a surge in demand following the projection of a quick economic recovery.".

Investors should pay close attention to changes in inventory data in order to detect early signs of a shift in demand," he added.

American Petroleum Institute data has shown that crude stocks in the US were down by 8.2 million barrels, two sources told Reuters. Government data is due later on Wednesday.

Meanwhile Shell’s (RDSB.L) stock was down 0.4%.

Shell's stock was down on Wednesday. Chart: Yahoo Finance UK
Shell's stock was down on Wednesday. Chart: Yahoo Finance UK

Royal Dutch Shell and Renault (RNO.PA) are reportedly interested in a stake in electric vehicle charging group Ionity, Reuters has reported.

Ionity, whose owners include Volkswagen (VOW3.DE) and BMW (BMW.DE) earlier said it wanted to expand its network of chargers across Europe and was welcoming new shareholders.

“For Shell, a stake in Ionity would further its plans to establish itself as a major player in Europe's future electric vehicle charging network as the Anglo-Dutch company seeks to pivot from its century-old oil and gas business," the report said.

Last week, Shell said it plans to buy BP’s stake in a North Sea field they share.

Watch: Why the biggest threat to market is oil prices 

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