Oil prices slid on Thursday after major producers warned of a risk to demand recovery if the coronavirus crisis extended further just as the United States inventories fell lower than expected.
Crude inventories in the US dropped for a fourth week in a row, even as net imports improved, the Energy Information Administration (EIA) said Wednesday.
Nevertheless, the 1.6 million-barrel fall for the week to 14th August was lower than a Reuters poll showing projections for a 2.7 million-barrel fall.
Fuel demand eased by 14% from the year-earlier period in the past four years, the EIA data also revealed.
The world’s oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi Arabia Energy minister, Abdulaziz bin Salman, said on Wednesday while urging the kingdom’s OPEC+ partners to abide by an agreement to cut supply.
Salman spoke at a virtual conference of the Organisation of the Petroleum Exporting Countries (OPEC) and Russia-led allies – a grouping known as OPEC+. The meeting was reviewing compliance with production cuts and left output reductions unchanged.
“The positive outcome from the OPEC+ meeting was counter-balance (to) the EIA reporting that U.S. oil inventories last week fell by (less than the) consensus,” said Avtar Sandu, Senior Manager Commodities at Phillip Futures.
Yet, a draft OPEC+ statement, seen by Reuters, said a second prolonged wave of the coronavirus pandemic posed a major threat to the oil market recovery.
The group urged members like Nigeria and Iraq to make more efforts to meet their quota commitments after they exceeded them between May and July.
OPEC on its part in past decades generally produced more than 30 million barrels per day (bpd) of oil but after 2020’s cuts, its production has fallen to 20 million from 22 million bpd.
Minutes from the United States Federal Reserve’s July 28-29 meeting, issued on Wednesday, revealed that policymakers worried that a rebound from the economic slowdown in the U.S., induced by the coronavirus pandemic, faces a highly uncertain direction, likely to impact oil demand.
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