Oil prices strengthened on Wednesday as OPEC and its allies complied with the agreement to cut oil supplies in September, as there are concerns that the recovery in oil demand will weaken with the rise of global coronavirus cases.
Earlier in the day, crude oil was supported by the bullish stock market. Even when stocks are under pressure with epidemic concerns, oil has risen, revived with expectations that OPEC will be able to contain supply abundance.
The fact that the dollar is traded less than the stock market may indicate that investors have changed their asset class and turned to oil. It is normal for the dollar to affect OPEC’s future policy.
Crude oil stocks are said to have dropped more than expected last week, according to US data.
Brent crude futures LCOc1 for December delivery settled up 87 cents, or 2.05%, at $43.32 a barrel. West Texas Intermediate (WTI) crude oil CLc1 futures also traded higher, settling up 84 cents, 2.09%, at $41.04 a barrel.
OPEC + achieved 100% compliance with its oil supply cut agreement in September according to two OPEC + sources. One of the sources said that the compliance in oil production in September was 105%, while the non-OPEC compliance was 97%.
However, there is still a risk that demand recovery may stall due to the recent increase in COVID-19 cases in many countries. OPEC lowered its oil demand forecast on Tuesday, citing economic disruptions caused by the virus.