The Organization of the Petroleum Exporting Countries (OPEC) released its monthly report on Tuesday, and the group cited a high degree of uncertainty hanging over the global oil market.
The global oil oversupply that drove U.S. crude oil prices to around $30 a barrel has now been worked off, according to OPEC, but still the group says the outlook for second half of the year for the market is highly uncertain.
The uncertain outlook suggests that OPEC members may be in no rush to relax their output cuts when they meet next week. OPEC responded to the last bear market by cutting output to help balance the supply glut. In January 2017 OPEC and some non-OPEC partners, including Russia, cut oil output by 1.8 million barrels per day (bpd).
In May, the OPEC Reference Basket (ORB), a weighted average of OPEC members' oil prices, increased by about 8.5% above the previous month, settling at $74.11 a barrel. Year-to-date in May, the ORB value was 31.7% higher at $67.48 a barrel, compared to the same period in 2017.
While oil prices have climbed, the group appears to be in no rush to ramp up its oil production.
"Recently, crude oil futures have lost some momentum amid uncertainty as traders prepare for potentially more supply returning to the market," OPEC said.
The group noted that the oil market continues to be underpinned by geopolitical uncertainty and robust U.S. crude inventories. The economic crisis in Venezuela has crippled the nation’s oil output while U.S. sanctions threaten to cut Iranian oil exports.
OPEC kept its projected world oil demand growth unchanged for 2018, but offered a slight upward revision to its total non-OPEC supply by 130,000 bpd to 59.75 million bpd.
OPEC will meet on June 22 to discuss a potential change to its oil production.