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  • Voluntary production cuts by OPEC members show that oil producing countries are doing what they can to stabilize the market, Helima Croft of RBC Capital Markets said.
  • Saudi Arabia said it will reduce output by an additional 1 million barrels per day from June 1. 
  • Ellen Wald of Transversal Consulting said Saudi Arabia, in particular, is looking to regain a measure of leadership that was lost in March when it decided to flood the market with oil.
  • While there are “green shoots,” the outlook for the oil market remains unclear as the pandemic continues, Croft said, pointing to the risk of a second wave of infections.

Voluntary production cuts by OPEC members show that oil producing countries are doing what they can to stabilize the market during the ongoing coronavirus outbreak, one strategist told CNBC this week.

Saudi Arabia on Monday said it will reduce output by an additional 1 million barrels per day from June 1, in a bid to support oil prices. Following the kingdom’s announcement, the UAE and Kuwait also announced supply cuts. That’s on top of an agreement between OPEC and non-OPEC allies, sometimes referred to as OPEC+, to lower production by 9.7 million bpd from May 1.

 

“The OPEC heavyweights are sort of lining up to try to do what they can to stabilize this market,” said Helima Croft, global head of commodity strategy at RBC Capital Markets.

“We’re already starting to see a pick up in demand as global lockdown conditions ease, people start driving again,” she told CNBC’s “Capital Connection” on Tuesday. “So, essentially what they’re doing is acting as an accelerator in terms of getting the market rebalanced.”

An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.