Crude futures rise as OPEC+ cut eclipse on Covid-19 resurge fears

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FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringer

Crude futures rose as initial signs that OPEC members intend to comply with promises to curtail production eclipsed fears that a resurgence in coronavirus cases would send demand back to the worst days of the pandemic.

Saudi Arabia commended Iraq for implementing almost all its pledged oil-production cuts, and Nigeria told the kingdom it was committed to hitting its target, in further signs that disputes among OPEC+ members over cheating of quotas are being resolved.

“It’s all about risk appetite and the hope of continued demand growth here,” said Bart Melek, global head of commodity strategy at TD Securities. Iraq and Nigeria pledging to “to live up to their supply cut commitments made investors comfortable to take a long stance on oil.”
a screenshot of a video game: Rally shows signs of petering out © Bloomberg Rally shows signs of petering out

Oil has been stuck in a rut after staging a months-long rally from historic lows in April. A wave of new coronavirus cases sweeping the U.S. has spurred concerns over a recovery in gasoline demand.

“We’ve been in a market that’s been in clear consolidation for quite some time,” said Thomas Finlon of Houston-based GF International. “After a considerable rally or selloff, the interesting thing is the market seems to be drawn back to unchanged on the day pretty quickly.”

Figures from the American Petroleum Institute showed U.S. crude stockpiles decreased 8.32 million barrels last week, but supplies in Cushing, Oklahoma, rose 548,000 barrels. The market is turning its attention to Wednesday’s U.S. Energy Information Administration inventory report.

“If crude oil storage posts a new all-time record, with a build at Cushing thrown in for good measure, I would tend to think the market would trade lower… possibly sharply lower,” Bob Yawger, director of the futures division at Mizuho Securities USA, said in a note to clients.

In the longer-term, OPEC expects demand for its crude to rebound next year, surpassing levels seen before the pandemic, as rival producers struggle to revive output. An OPEC+ committee meets Wednesday to discuss easing record supply curbs that have helped the market recover. OPEC+ is expected to stick with plans to taper the cuts from August even as the virus rages in many parts of the world.
Prices:
West Texas Intermediate for August delivery rose 19 cents to $40.29 a barrel in New YorkBrent for September settlement gained 18 cents to $42.90 a barrel

The OPEC+ committee will consider whether the alliance should keep 9.6 million barrels of daily output off the market for another month, or taper the cutback to 7.7 million barrels as originally planned. Members are leaning toward the latter option, according to several national delegates who asked not to be identified.
Other oil-market news
Middle East producers are banking on robust demand from Asia for their more sulfurous and dense crude, boosting prices for the dirtier oil even as OPEC+ considers loosening cuts.The coronavirus pandemic will accelerate Eni SpA’s pivot away from conventional refineries to investing in greener facilities.

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Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.

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