Oil eases as US production returns after storm

Tuesday, 22 Sep, 2020

We could see a choppy trade over the next two days with the storm providing a possible floor, and the rise in coronavirus cases cutting further into demand.

"Although no amendments to the current supply-cut deal have been proposed by OPEC+ today, the producers group gave the impression that it does not sweep troubles under the carpet", said Rystad Energy's Head of Oil Markets, Bjornar Tonhaugen.

The comments by Prince Abdulaziz bin Salman, Opec's most influential minister, came after a virtual meeting of a key panel of Opec and allies, led by Russian Federation, known as Opec+.

"I think we've seen the best of the oil rally and it will struggle to make any substantial gains from now", said Jeffrey Halley, a senior market analyst for Asia Pacific at Oanda Corp.

Saudi Energy Minister's warning to short-sellers may temporarily underpin crude oil prices.

During a meeting on Thursday, OPEC+ agreed to cut output by 7.7 million barrels of oil per day and warned those in attendance that the organisation would take decisive action against any member that chose not to comply with the agreement. "I'm going to make sure whoever gambles on this market will be ouching like hell". As yet, it is uncertain regarding which centers fit the meaning, however the possibility of more supply to a now saturated market is developing down pressure on rates.

"There are signs of economic recovery in some parts of the world, visible through the relative improvement in mobility, and some initial indications of declines in oil stock overhang", a technical OPEC+ panel said in a report Wednesday.

OPEC and non-OPEC allies, sometimes referred to as OPEC+, will convene for an online meeting to review the market and discuss compliance with deep production cuts.

Brent oil futures extended gains to settle up $1.08 or 2.56% at $43.30 a barrel.

Saudi Arabia's crude oil exports rebounded in July to 5.73 million barrels per day (bpd) from a record low in June, official data showed on Thursday.

Brent crude oil, the global benchmark, fell 2.4% to $42.12 a barrel and West Texas Intermediate futures, the main USA benchmark, were down 2.7% at $40.03 a barrel.

'We applaud the excellent results of the cooperative work of OPEC+, which has allowed us to reach a historic level of compliance with the production adjustment commitment in August of 101 percent that contributes to our efforts to rebalance the world market, ' the minister tweeted.