Oil rises as International Energy Agency boosts demand forecast.
Oil prices climbed more than 2% on Friday after the International Energy Agency (IEA) bumped up its 2020 demand forecast but record-breaking new coronavirus cases in the United States tempered expectations for a fast recovery in fuel consumption.
Prices also found support after data showed U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for a 10th week in a row.
Brent crude LCOc1 settled up 89 cents, or 2%, at $43.24 a barrel and U.S. oil CLc1 settled up 93 cents, or 2.4%, at $40.55 a barrel.
A strong stock market also boosted oil prices. A slate of economic data, including a record monthly payrolls addition, pointed to a revival in U.S. business activity in June.
U.S. crude was little changed on the week while Brent notched a weekly gain of about 1%.
The Paris-based IEA raised its demand forecast to 92.1 million barrels per day (bpd), up 400,000 bpd from its outlook last month.
“While the oil market has undoubtedly made progress … the large, and in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control,” the IEA said.
Prices had dropped early in the session after Libya National Oil Corporation announced it had lifted its force majeure on all oil exports after a half-year blockade by eastern forces.
“The expected re-start of Libyan exports will only add to the vulnerability of the OPEC+ production restraint in keeping the energy complex heavily reliant upon a renewed expansion in risk appetite for any advances back to around this week’s highs,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Oil inventories remain bloated due to the evaporation of demand for fuel during the initial outbreak.
“If we take a bigger picture view of the market, what stands out to us is that we have not yet seen much of a decline on the global inventory front,” JBC said.
Today oil slips as traders eye supply cut easing at OPEC meeting.
Oil slipped in early Asian trade on Monday as traders eyed an OPEC technical meeting this week which is expected to recommend an easing in supply cuts that have been propping up crude prices.
Oil prices have recovered sharply from multi-decade lows in April after the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, cut output by a record 9.7 million barrels per day for three months since May.
OPEC’s Joint Ministerial Monitoring Committee (JMMC) will meet on Tuesday and Wednesday to recommend the next level of cuts.
OPEC and Russia were expected to ease their supply cuts as global oil demand has recovered and prices have bounced back.
“The planned easing of OPEC+ production cuts next month … and a potential rebound in U.S. production could add pressure on the supply side of the equation,” Stephen Innes, chief global markets strategist at AxiCorp said in a note.
Oil Future close 10th July, 2020
Brent crude: $ 43.24 (+0.89)/brl FM contract delivery Sep
Light crude (WTI): $ 40.55 (+0.93)/brl FM contract delivery Aug
Gasoil ARA; $ 369.75 (+5.25)/mton FM contract delivery Aug (New)
NY Harbor Ulsd: $ 382.12 (+5.33)/mton FM contract delivery Aug
The Oil Market is trading at GMT 05.25: Brent – 32 cents and WTI – 33 cents
Expect Fuel Oil prices to increase by 5 – 6 usd/mton today. MGO and NY Harbor Ulsd up about the same as the Fuel Oil 5 – 6 usd/mton.