Investing.com – A group of major crude producers next meets at the start of June, and UBS expects them to agree to extend their voluntary production cuts, in an attempt to keep the oil market in balance.

The Organisation of Petroleum Exporting Countries and allies, a group known as OPEC+, meets on June 1, and are set to evaluate their currency output cuts in place.  

OPEC+ oil producers are making voluntary output cuts totalling about 2.2 million barrels per day for the first half of 2024, led by Saudi Arabia rolling over an earlier voluntary cut.

These curbs come on top of earlier reductions announced in various steps since late 2022 and bring the total pledged cuts to about 5.86 million bpd, equal to just under 6% of daily world demand.

“Oil inventories falling by less than we had expected in recent weeks and U.S. interest rates staying higher for longer are likely to have an impact on OPEC+’s policy of being proactive, preemptive, and precautionary,” said analysts at UBS, in a note dated May 14. 

“We now expect the eight member states with voluntary production cuts to extend them by at least three months ahead of the ordinary meeting at the beginning of June.”

The Swiss bank expects the group to review the assessments from the three independent sources on the production capacity of all member states. 

“The new production capacity will be an important tool to begin talks on an extension of the Declaration of Cooperation currently set to expire at the end of this year,” the bank added.

UBS retains a modestly positive outlook for crude prices over the coming months supported by healthy demand and efforts by OPEC+ countries to keep the oil market in balance.