Oil rises after Saudi Arabia presses cartel on compliance
During the Opec+ joint ministerial monitoring committee meeting, Saudi Arabia condemned members that have been pumping too much crude
New York/London — Oil climbed on Thursday after Saudi Arabia showed its determination to stop oil cartel Opec and its alliance members, which includes Russia (Opec+) exceeding their production quotas.
Futures in New York surged as much as 2.1% after trading in negative territory for most of the session.
During the Opec+ joint ministerial monitoring committee meeting, Saudi Arabia’s Prince Abdulaziz bin Salman forcefully condemned Opec+ members that have cheated on production quotas by pumping too much crude.
The United Arab Emirates signalled that it would make up for pumping too much oil in the past two months. Still, Iraq is exporting more crude so far in September than its daily average in August.
“You have the two most powerful members of the technical committee giving this narrative,” said Bart Melek, head of global commodity strategy at TD Securities. “There is a good set of assumptions to be made that there is pressure being applied on those who may not be fully compliant.”
As most Americans are forced to remain at home moving into their autumn, the summer’s steady rebound in petrol demand has stalled out with the end of the driving season. Meanwhile, a vital profit metric for oil refiners in Europe shows refineries are making next to nothing from diesel, which could ultimately lessen how much crude the plants process and drag on the price of oil.
The Opec+ outlook isn’t much brighter, with the group seeing risk to oil demand from a second wave of the Covid-19 pandemic, according to a draft communiqué after its committee meeting.
As the recovery in demand continues, shipping analysts cut their estimates for all oil tanker earnings for the third and fourth quarters, as well as for all of 2020, according to a Bloomberg survey of shipping analysts.
Physical markets for actual barrels of crude are showing signs of weakness, with Bakken crude for delivery at Clearbrook, Minnesota, trading in recent sessions at its largest discount to Nymex oil futures in about a week. Poseidon crude erased its premium against Nymex West Texas Intermediate futures, trading at its weakest level in about two months.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.