The Organisation of Petroleum Exporting Countries (OPEC), saw a major drop in its oil output for May following voluntary production cuts by members said to help support the market.
According to a report carried out by Reuters, OPEC production was down 460,000 barrels per day bpd, from April, and down more than 1.5 million bpd from September, though increases by some OPEC+ members counterbalanced that drop in output.
Six OPEC members in May voluntarily agreed to cut 1.04 million bpd in addition to the already-existing 1.27 million bpd
The survey comes after Moscow stated last week that OPEC+ would not cut production further. This has sent oil prices tumbling. At the same time, last week also saw the Saudis issue a threat to oil speculators ahead of the next OPEC+ meeting on June 4.
OPEC appears to be trying to head off speculators who are profiting from predicting OPEC+ market decisions.
Saudi Arabia Energy Minister Prince Abdulaziz bin Salman last week issued the threat, which some fear could lead to another output cut that would boost prices and punish short-sellers.
“I keep advising them (referencing oil speculators) that they will be ouching, they did ouch in April, I don’t have to show my cards. I am not a poker player…but I would just tell them to watch out,” the energy minister warned. As of May 16, oil short positions were at 184 million bpd, up 140 per cent from shorts a month earlier.
On Wednesday morning, Goldman Sachs commodities analysts said they expected the nine major OPEC+ productions undertaking voluntary cuts to “keep production unchanged but utilise some partly offsetting hawkish rhetoric”.
Saudi Arabia’s fiscal breakeven oil price is $78 per barrel this year, though in practice, it could be higher based on spending needs for balancing the budget.
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