Oil prices edge up despite anemic demand recovery
The Opec chief ruled out another plunge in demand as in the second quarter.
Oil prices made small gains on Tuesday after sharp losses as global economic and oil demand recovery remained anemic.
Overall sentiment remained subdued as a surge in global Covid-19 cases dimmed prospects for a crude demand surge while supply continued to rise.
However, Opec Secretary General Mohammad Barkindo ruled out another plunge in demand as in the second quarter.
“We do not expect a relapse to the massive contraction that we saw in the second quarter,” Barkindo said at the virtual 2020 India Energy Forum event.
“We remain cautiously optimistic that the recovery will continue. It may take longer, maybe at lower levels, but we are determined to stay the course,” the Opec chief was quoted as saying.
Brent crude was up 19 cents, or 0.5 per cent, at $40.65 a barrel by 0324 GMT. US WTI crude gained 15 cents, or 0.4 per cent, at $38.71 a barrel. Both contracts fell more than 3.0 per cent on Monday.
Market watchers said additional supply coming out of Libya and the Opec+ plan to ease the cuts by another two million barrels per day as of January 2021 have been putting more pressure on oil prices in recent weeks.
Libyan production is expected to reach one million bpd in the coming weeks, the country's national oil company said on Friday, a quicker return than many analysts had predicted.
Barkindo said Opec+ is determined to assist the market to restore stability by ensuring that the stock drawdowns continue in order to restore the supply-demand balance. His comments came amid mounting speculation on whether the oil producers group would delay the easing of the cuts by several months until global oil demand shows positive trends.
In contrast to Opec chief’s gloomy outlook on demand recovery, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said on Monday the worst is over for the crude market.
“We are very much vigilant. There is a big shift altogether in terms of where we are today and where we were in April and May. The discipline we put together as Opec+ is very assuring to the market. I would attribute it to everybody who is part of Opec+. This time we were different,” the Saudi minister said.
Opec said at a meeting earlier this month that it achieved an overall conformity level of 102 per cent with supply cuts, which is the highest since May, excluding voluntary commitments made by Saudi Arabia, the UAE and Kuwait. email@example.com
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