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June 2 (UPI) -- Doubts remain over whether OPEC and its allies can reach a consensus agreement on production levels this weekend, but at least one analyst said Friday it's unwise to place any bets. Ministers from parties to OPEC+, the core members of the Organization of the Petroleum Exporting Countries and non-member state allies such as Russia, meet Sunday in Vienna to consider production allotments.
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The group opted to cut production by around 1.6 million barrels per day starting in May. The decision was rubber-stamped, with the group saying it was "a precautionary measure aimed at supporting the stability of the oil market."
Norwegian consultancy Rystad Energy at the time said the decision was expected to push the price of crude oil to $100 per barrel, and possibly even $110 per barrel by the summer.
Brent, the global benchmark for the price of oil, traded as high as $88 per barrel in late January but has faltered against concerns about a possible recession in the world's major economies. Driven by the passage of a debt ceiling resolution in the U.S. Congress, Brent was rallying on Friday but only managed to move into the mid-$70 range.
That is an obvious concern for OPEC+ ministers. The Saudi energy minister warned recently against betting on a lower-for-longer outlook for the price of oil, though Russia suggested economic trends may be enough to support prices from here.
Phil Flynn, an energy analyst for The PRICE Futures Group in Chicago, said supply and demand data on the global level suggest more oil is needed, not less.
"Yet prices will force them perhaps into a potential production cut," he said.
OPEC economists in their monthly market report for May kept many of their forecasts unchanged from previous reports. The U.S. economy is expected to expand only by 1.2% this year, after a 2.1% growth rate for 2022. China's economy is on pace to move the other way, expanding by 5.2% in 2023, compared with 3% last year.
More recently, however, the U.S. economy has seen increased headwinds by way of slower wage growth and pressure in the housing market. A post-COVID rebound in China, meanwhile, has been weaker than expected.
The headwinds were blowing strong enough for commodity strategists at Swiss investment bank UBS to shave a few dollars off its forecast for Brent crude oil. The U.S. government, meanwhile, expects Brent to trade at $79 per barrel on average for the year, down from $101 in 2022.
A recent survey from Gulf Intelligence, an analytical group in Dubai, showed about 63% of the respondents do not expect OPEC+ to announce further cuts this weekend. Amena Bakr, the deputy bureau chief for Energy Intelligence, said during a recent forum for Gulf Intelligence that she was in the "no" camp.
"Market expectation leaning towards no change at upcoming OPEC+ meeting," she said.
OPEC+, however, has a knack for surprises, particularly on weekends. The announcement on production cuts from May caught the market off guard and led to a 6.5% spike in the price of crude oil the day after the announcement.
Ed Moya, a senior market analyst for the brokerage OANDA, said it may be unwise to place any bets on the next move from OPEC+
"It seems the oil market is doubtful that a consensus for another output cut can be reached between the Saudis and Russians, but traders should never underestimate what the Saudis will do and leverage during OPEC+ meetings," he said.
