Energy sector-related exchange traded funds led the charge on Friday as the Organization of Petroleum Exporting Countries and its allies led by Russia plan to meet Saturday to discuss an extension in the record production cuts.
Among the best performing non-leveraged ETFs of Friday, the Invesco S&P SmallCap Energy ETF (NasdaqGM: PSCE) advanced 13.7%, VanEck Vectors Oil Services ETF (NYSEArca: OIH) rose 12.1% and SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) increased 12.3% while the broader Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy ETF, was 7.4% higher.
Meanwhile, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, added 6.1% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, was up 6.5% as WTI crude oil futures rose to $39.5 per barrel and Brent crude gained to $42.3 per barrel.
The so-called OPEC+ producers previously agreed to reduce production by 9.7 million barrels per day during May and June to stabilize oil markets after a precipitous collapse due to the fall-off in demand in response to the coronavirus crisis, Reuters reports. The reductions have been due to fall off to 7.7 million barrels per day from July to December.
However, two OPEC+ sources hinted that Saudi Arabia and Russia are willing to extend the deeper cuts until the end of July, and Riyadh was even pushing to extend the cuts until the end of August.
“The conditions right now warrant hopefully successful meetings,” Saudi Energy Minister Prince Abdulaziz bin Salman told Reuters on Friday, adding that coordination was underway to hold the OPEC and OPEC+ meetings on Saturday.
Three OPEC sources, though, warned that an extension to cuts was contingent on high compliance. Countries producing above their quota in May and June are required to stick to their overall targets and compensate for earlier overproduction by cutting back in the months ahead.
However, not everyone is happy with the production cut schedules.
“As a representative of the UAE, I find it disappointing and unacceptable that some of the largest producers with capacity like (Saudi Arabia) and Russia comply 100% or more while other major producers do less than 50%,” energy minister of the United Arab Emirates, Suhail Al Mazrouei, said in a letter, according to Reuters.