Oil up on back of extended OPEC production cuts

LONDON, June 8, 2020 – Oil was up on Monday morning in Asia, after OPEC extended its existing production cuts into July on Saturday, with output to be cut by 9.6 million barrels next month.

Brent oil futures rose 0.95% to $42.37 by 9:55 PM ET (2:55 AM GMT) and WTI futures gained 0.03% to $39.56, reversing earlier losses.

Brent futures gained up to 2% earlier in the session, after gaining 5.2% during the previous session in anticipation of the OPEC decision.

Investor sentiment also got a boost from Sunday’s Chinese customs data which indicated that the country’s crude imports soared to 11.34 barrels a day, 15% more than April, with the data a positive indication of China’s recovery from the Covid-19 virus.

Meanwhile, OPEC still faces the challenge of getting certain member countries to meet their pledged cut targets.

“While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer, “ Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNBC.

The reopening of two major oilfields in Libya, after a months-long blockade, could present a new headache for OPEC as the organization struggles to prevent a supply glut.

“The potential return of Libyan output could also cause considerable challenges for the OPEC leadership,” added Croft.

By Investing.com: https://www.investing.com/news/commodities-news/oil-up-on-back-of-extended-opec-production-cuts-2194830

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