Oil prices weakened further on Wednesday as industry figures demonstrating an upswing in United States’ crude inventory and a projection saying U.S. oil output could fall less than expected this year, heightened fears over glut.
Only weak advances were made in prices at the previous session and prices have been held in a narrow band in the last two weeks amidst anxieties over an uptick in coronavirus infections around the world subdues hope of a rebound in demand for fuel.
U.S. oil storage swelled last week, confounding expectations of a drawdown even though decline in gasoline and distillate stocks outpaced expectations according to statistics from industry group, the American Petroleum Institute on Tuesday.
The U.S Energy Information Agency (EIA) stated on Tuesday U.S. crude oil is set to fall by 600,000 barrels per day (bpd) in 2020, a little lower that the 670,000 bpd predicted before.
Yet, it also anticipated global oil demand would rebound through the end of 2021, projecting demand of 101.1 million bpd by the fourth quarter of 2021.
“The EIA’s forecast of a lower decline in U.S. output was partially offset by its outlook for firm demand recovery, which limited losses in oil markets.
“Still, expectations that the Organization of the Petroleum Exporting Countries (OPEC) and allies would taper oil output cuts from August and softer U.S. equities added to pressure,” Hiroyuki Kikukawa, General Manager of Research, Nissan Securities said.
Abu Dhabi National Oil Co (ADNOC) has the ambition to boost oil exports in August, the first intimation that OPEC and its Russia-led allies jointly known by the tag, “OPEC+,” are planning to reduce record oil output cuts next month, sources familiar with the development told Reuters.
OPEC+’s key ministers are set for talks next week.
The number of confirmed COVID-19 cases in the U.S. crossed the 3 million mark Tuesday, a Reuters tally showed.
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