Oil prices inch up but gloomy demand outlook caps gains; Bonny Light loses $0.46

Oil prices drifted a little higher on Tuesday but projections of a more sluggish than expected recovery in world fuel demand due to the coronavirus pandemic weighed on trade.

Brent crude was up by 63 cents or 1.59% at $40.24 a barrel by 11:47 West Africa Time, while U.S. West Texas Intermediate crude (WTI) futures were down 67 cents, or 1.80% at $37.93 a barrel. Both contracts slipped on Monday.

Nigeria’s banner oil grade, Bonny Light, eased by 46 cents or 1.18% at $38.52 a barrel on Monday just as Qua Iboe, another key national crude grade, shed 35 cents or 0.87% at $39.76 per barrel.

The International Energy Agency (IEA) lowered its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd on Tuesday, citing warning about the pace of economic recovery.

“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” it said in its monthly report.

Read also: Oil prices rise as storm threatens U.S. gulf production, Bonny Light loses $0.28

Its revision is in harmony with estimates from key oil producers and traders, with the Organisation of the Petroleum Exporting Countries (OPEC) trimming its oil demand forecast and BP saying demand might have peaked in 2019.

OPEC saw global demand plunging 9.46 million bpd in 2020 in a monthly report issued on Monday, surpassing the 9.06 million bpd decrease it forecasted last month.

OPEC+’s joint ministerial committee meeting scheduled for Thursday is not anticipated to prescribe more profound output cuts, but rather direct its attention at compliance and compensation measures for its current cuts, sources told Reuters.

Oil price was partially helped by worries regarding output disruptions in the U.S. from Hurricane Sally.

On Monday, energy firms, refiners and ports scrambled to close down as Hurricane Sally raged stronger on its approach to the central U.S. Gulf Coast, the second major hurricane to hobble oil and gas activity in the past month.

In China, the world’s biggest oil importer, crude oil throughput in August jumped from a year ago, touching its record second-highest point as refineries worked to digest historic imports earlier this year.

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