OPEC+ panel discusses weaker oil demand outlook, Libya supply rise, sources say

Daniel Fowler
October 16, 2020

European countries re-impose curfews and general isolation measures, in light of the increase in new cases of Corona.

The moves came as increasing COVID-19 infections in some major economies cast more uncertainty over demand recovery.

In late Asian transactions, Brent crude futures fell 28 cents, or 0.7 percent, to $ 43.04 a barrel, while US West Texas Intermediate crude futures fell 24 cents, or 0.6 percent, to $ 40.80.

Oil pared losses as declining USA crude and fuel inventories eased concerns following reports of a sluggish labor market.

The American Petroleum Institute in a new report said US crude inventories fell more than expected in the latest week; Energy Information Administration data is expected to confirm the draw on Thursday.

According to figures from the Petroleum Institute, the consumption of crude refineries decreased by 601 thousand barrels per day.

Larger than expected crude inventory draws reported Wednesday and good compliance by the Organization of the Petroleum Exporting Countries (OPEC) on oil supply cuts helped oil prices overcome rising COVID numbers in Europe and repeat their previous session's performance by rising over 2 percent.

Crude stockpiles fell by 5.4 million, while distillate stockpiles, which include diesel and heating oil, fell by 3.9 million barrels.

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It is the largest daily rise in cases in the region since an extended testing regime was introduced. There are now 164 patients in hospitals with Covid-19, including 24 in intensive care.

The group had 102% compliance with its production cuts in September, two OPEC+ sources told Reuters. OPEC + plans to reduce production cuts, starting January 1.

Oil rises 2% as OPEC complies with production cuts.

Some analysts believe that the glut of global oil supply will not end soon, and are wondering about expectations of raising production.

OPEC+ - producers from the Organization of the Petroleum Exporting Countries (OPEC) and others including Russian Federation - have been reducing output since January 2017 in a bid to balance the market, support prices and reduce inventories.

China's economic recovery from coronavirus lockdowns has spurred a pick-up in fuel use, and oil product demand will rise further to 13.53 million bpd in the fourth quarter, up from 13.27 million bpd, said Chris Page of Rystad Energy. "Demand in itself is still weak", he said.

Barkindo said when OPEC+ holds its ministerial meetings on Nov 30 and Dec 1 it will take stock of the whole year to inform any decision to stay the course or amend its policy.

Russian Energy Minister Alexander Novak said that leading oil producers will start easing output curbs as planned in January despite a spike in coronavirus cases.

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