Will the OPEC deal be renewed in June?

That is one question, which is still and likely to be debated over and over until we reach the date of the meeting. One positive thing about the OPEC deal has been the ability and the willingness among members to abide by it. So far, data suggests that OPEC remains 94 percent compliance with the deal; not many in the oil market expected them to pull it off. However, commentaries within the OPEC itself suggest that despite the looking good compliance, the deal may not get extended beyond the current timeline that ends in June. Even if it gets a renewal, the next one would be very unlikely.

Saudi Arabia had said early last month that it may not get the extension, despite, it having some positive impact in the market, especially in the physical oil market. Recently, Saudi Arabia’s oil minister Khalid al-Falih added to that skepticism by saying, "History has demonstrated that intervention in response to structural shifts is largely ineffective, and I believe we in the organization have learned that lesson. That's why Saudi Arabia does not support OPEC intervening to alleviate the impacts of long-term structural imbalances………In light of improving fundamentals, whose effect has been amplified by the OPEC and non-OPEC cooperation framework, I am optimistic about the global market outlook in the weeks and months ahead………..Though I would caution that my optimism should not tip investors into what I would call irrational exuberance or wishful thinking that OPEC or the kingdom will underwrite the investments of others at our own expense and long-term interests."

We figure that more could be there rather than just improving fundamentals which are fuelling the skepticism and they could be,

• At $55-60 per barrel, the oil production in the US remains competitive; unlike the situation where shale oil was drying up when the price declined below $40 per barrel.
• Since the deal, the OPEC has lost about 5 percent market share in Asia as oil from non-participatory countries continue to plug additional demand as the additional barrels from OPEC remain tight in the region.