Yesterday Oil rose slightly as OPEC+ complies with production cuts.
Oil prices rose slightly on Tuesday as OPEC and its allies cut production by more than agreed to in June, although demand concerns lingered due to increased cases of COVID-19 in the United States. Brent crude LCOc1 futures settled up 18 cents at $42.90 a barrel, after moving lower earlier in the session. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 19 cents to $40.29 a barrel.
Crude futures strengthened in post-settlement trading, rising after the American Petroleum Institute, a trade group, said U.S. crude inventories fell more than expected in the latest week.
The market will be watching for additional weekly data Wednesday from the U.S. Energy Information Administration.
Analysts estimate that U.S. gasoline stockpiles fell by 600,000 barrels and crude oil inventories by 2.1 million barrels last week, a preliminary Reuters poll showed.
The Organization of the Petroleum Exporting Countries and its allies led by Russia, collectively known as OPEC+, have delivered compliance of 107% with their agreed oil output cuts in June, an OPEC+ source said on Tuesday.
The market is eagerly awaiting news from OPEC+ on the next level of production cuts. OPEC’s Joint Technical Committee met on Tuesday, with the Joint Ministerial Monitoring Committee due to meet on Wednesday.
Under the existing supply pact, OPEC+ is set to taper its record production cut of 9.7 million barrels per day (bpd) to 7.7 million bpd from August through December.
The oil market is moving closer to balance as demand gradually rises, OPEC’s secretary general said on Monday.
Oil climbs today morning, after sharp drop in U.S. crude stocks. OPEC meeting in focus.
Oil prices rose on Wednesday following a sharp drop in U.S. crude inventories, with the market waiting for next steps from a meeting later in the day on the future level of output cuts by OPEC and its allies.
Reflecting a recovery in fuel demand despite the coronavirus pandemic, U.S. crude inventories fell by 8.3 million barrels in the week to July 10, beating analysts’ expectations for a decline of 2.1 million barrels, according to data from industry group the American Petroleum Institute.
Official numbers from the U.S. Department of Energy’s Energy Information Administration (EIA) are due on Wednesday.
API numbers released overnight, have provided some support to the market in early morning trading today.
On supply, the market will be closely watching for news from a meeting of the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) later on Wednesday.
“The market will be eager to see if deeper cuts will be rolled over for an additional month, or whether the group will stick to the original plan, and start trimming cuts,” according to ING Economics.
“Most indications suggest that it will be the latter, with more focus on compliance and compensatory cuts.”
Key members of OPEC and allies including Russia, collectively known as OPEC+, are set to decide whether to extend output cuts of 9.7 million barrels per day (bpd) that end in July or ease them to 7.7 million bpd.
“Oil prices are likely to be traded in a range of $40, with the market paying close attention to today’s JMMC results,” said Kim Kwang-rae, commodity analyst at Samsung Securities in Seoul.
Brent crude: $ 42.90 (+0.18)/brl FM delivery Sep
Light crude (WTI): $ 40.29 (+0.19)/brl FM delivery Aug
Gasoil ARA; $ 366.50 (-2.00)/mton FM delivery Aug
NY Harbor Ulsd: $ 375.84 (-0.83)/mton FM delivery Aug
The Oil Market is trading slightly upward at GMT 05.13: Brent $ +0.19, WTI $ +0.19.
Expect Fuel Oil prices little change today. MGO slightly down 1 – 2 usd/mton and NY Harbor Ulsd little change. The Market is in a waiting mode hungry for results from the OPEC+ meeting today.