Oil roars back as OPEC+ address market weakness

Oil roars back as OPEC+ address market weakness

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Brent oil prices extended their gains to trade up 3 per cent on the news about a possible extraordinary meeting, above US$43 (RM117.49) per barrel.

Indrajit Sen, Oil & Gas Editor at MEED, part of GlobalData, says: "The Saudi Arabia-led organization's greatest achievement to date has arguably been its success in keeping a Russia-led group of 11 non-Opec oil producers engaged since November 2016, in a mechanism to achieve global crude demand-supply balance through production cuts".

Benchmark oil prices are rising steadily during trading on Friday following the results of the OPEC + Monitoring Ministerial Committee (JMMC).

WTI oil hit two-week high on Thursday in extension of Wednesday's 4.4% advance, inflate by significant drop in United States crude stocks.

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The panel of major producers, including Saudi Arabia and Russian Federation, did not recommend any changes to their current output reduction target of 7.7 million barrels per day (bpd), or around 8% of global demand, according to a draft press release and an internal report.

The price of WTI crude oil futures for October in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by $ 0.31 (0.76%) - to $ 41.28 per barrel. The expectation that output could fall as the UAE and others trim production bolstered prices, he said.

In the U.S. Gulf Coast region, companies are beginning to return to business as usual following Hurricane Sally.

US energy companies were starting to return crews to offshore oil platforms in the Gulf of Mexico after Sally halted operations for five days, shutting down almost 500,000 bpd of output.

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The cartel took up the same theme in a statement noting that despite "some signs of gradually improving market conditions... the pace of recovery appeared to be slower than anticipated with growing risks of a prolonged wave of Covid-19".

But despite another session in which the analytical conviction of demand recovery faltering due to rising Covid infections was put into serious question, pundits continued expound a gloomy outlook, case in point: Reuters columnist Clyde Russell, who on Thursday wrote that "the industry knows it's in the worst situation in generations as far as demand goes, and that there is considerable uncertainty over how the situation will unfold in coming months".

The U.S. Labor Department's report showed the number of Americans filing new claims for unemployment benefits fell last week, but remained at extremely high levels as the labor market recovery shifts into low gear and consumer spending cools. "Opec knows it is battling probably the biggest oil demand erosion challenge it has ever faced, and must continue working with its non-Opec allies in the future to overcome the downturn".

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