Oil Futures Settle Notably Higher Amid Optimism About Production Cuts
Despite rising concerns about an increase in new coronavirus cases in the U.S., China and a few other countries, crude oil prices moved higher on Thursday amid hopes the members of OPEC and the group’s allies will comply with their production cut deal.
A panel consisting of ministers from OPEC member countries and their allies met today to review production cuts. The main agenda of the meet was to discuss and review supply cuts and to improve compliance so that oil prices are supported amid uncertainty about demand due to the ongoing coronavirus pandemic.
West Texas Intermediate Crude oil futures for July ended up $0.88 or about 2.3% at $38.84 a barrel.
Brent crude futures were rising nearly $0.80 or about 2% at $41.48 a barrel.
The OPEC’s Joint Ministerial Monitoring Committee, or JMMC, at its meeting today, stressed the importance of full compliance with agreed production cuts. The panel also worked out plans to make sure that the countries which failed to fully meet their reduction obligations last month do make up soon and fall in line.
The committee said Iraq and Kazakhstan have submitted schedules to compensate for not fully meeting their obligations. The panel says the compliance level stood at 87% for the month of May. Currently, the OPEC+ are in agreement to cut output by a record 9.7 million barrels per day.
A report from OPEC, released on Wednesday, said there will be room for its members to ease their production constraints later in the year.
The OPEC report says global demand for crude may rise to 27.8 million barrels a day in the third quarter and to 31.2 million barrels per day by the final quarter of this year.
A report from the Energy Information Administration on Wednesday showed U.S. crude stockpiles rose 1.2 million barrels last week, adding to mounting evidence that it will take quite some time to reduce excess global stockpiles.