Declining production in oil-producing countries and recovering demand

International oil price continues to rebound in adjustment

As of May 29, WTI futures delivered in July closed at $35.49 a barrel, up 5.28 percent. Brent crude, which was due for delivery in July, closed at $35.33 a barrel, up 0.11%. International oil prices have risen for five weeks as production in major oil producers has fallen and countries have lifted restrictions to boost demand.

Saudi Arabia, Russia-based "OPEC" oil producers, the overall rate of production reduction was recognized by the market. Saudi Arabia said it would cut another 1 million barrels a day in June, and Kuwait and the United Arab Emirates also announced that they would increase production cuts in June. Russia's crude oil production from May 1 to 19 was 8.72 million barrels per day, close to the 8.5 million barrels per day quota.

Oil production in non-Opec oil-producing countries such as the United States, Canada, Brazil and Norway also fell by more than 3 million b/d, effectively easing concerns about continued oversupply. According to the U.S. Energy Information Agency (EIA), U.S. oil production has fallen 12 percent to 11.4 million barrels a day since early March. Alberta, Canada, has reduced oil production by about 1 million barrels per day. 

Recently, the United States and Europe and other countries and regions began to gradually restart the economy. Germany, Spain, Greece and other countries announced that they will soon release travel restrictions to stimulate oil demand. EIA data show that in the week ending May 15, U.S. crude oil stocks (strategic reserves) were down 5 million barrels from the previous week. IHS Markit vice president and head of the oil market, Jim Bukhard, estimates that China's crude oil demand will return to 92 percent in May 2019.

Goldman Sachs expects global oil market demand to outstrip production in June. In a report in mid-may, however, it said there was little room for a short-term rise in oil prices as crude and refined oil supplies remained severely oversupply.

On may 31st, algeria, opec's rotating presidency, proposed that the "opec" meeting, scheduled for june 9-10, be advanced to june 4. The meeting will discuss market fundamentals and possibly adjust the agreement reached in April to reduce global oil production by nearly 10 per cent to support the market in the face of weak demand.

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