As OPEC and its allies cut production, it showed a slight increase on Tuesday, but demand concerns are growing due to rising COVID-19 cases in the US.
Brent crude LCOc1 futures settled up 18 cents at $42.90 a barrel, after moving lower earlier in the session. West Texas Intermediate (WTI) crude CLc1 futures rose 19 cents to $40.29 a barrel.
US crude oil stocks are said to have dropped more than expected last week. The market is waiting for US official data to be released on Wednesday.
Analysts estimate that US gasoline stocks dropped 600,000 barrels last week and crude oil stocks decreased 2.1 million barrels last week.
In a statement, it was said that its allies, including the Organization of Petroleum Exporting Countries and Russia, collectively known as OPEC +, complied with 107% of oil production cuts adopted in June.
Within the scope of the current supply agreement, OPEC + will reduce the daily production cut to 9.7 million barrels (bpd), which will continue until the end of July, to 7.7 million bpd from August to December.
The market eagerly awaits the upcoming news about production cuts from OPEC +. This slowed down the market, however, compatibility data were supportive.
Still, after similar cases in the US states like Florida and Texas, the industry remained cautious about concerns that California could boost coronavirus locking measures, as he did on Monday. New restrictions were introduced in Asia and Australia.
OPEC said the oil market has begun to approach equilibrium as demand gradually increases. In his monthly report, he said he expects a record increase of 7 million bpd for global demand next year on a daily basis, but this demand will be weaker than the pre-COVID level.
China’s June crude oil imports reached the highest level on a daily and monthly basis.
Nevertheless, oil demand seems unlikely to exceed pre-COVID levels by late 2021.