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Producers stick to production cut practices

by Bunkerist
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Oil prices dropped on Tuesday, but overnight gains were preserved as OPEC + said it almost fully complied with output cuts it imposed to repair the drop in fuel demand and prices caused by the coronavirus outbreak.

Brent crude LCOc1 was down 22 cents, or 0.5%, at $45.15 a barrel by 0322 GMT, after gaining 1.3% on Monday.

West Texas Intermediate (WTI)  crude was down 23 cents, or 0.5%, at $42.66 a barrel, having risen 2.1% in the previous session.

Oil producers have reduced production to record levels to reduce stocks worldwide as demand has decreased due to the epidemic. Compliance with OPEC + oil production cuts is said to be around 97% in July.

Some oil producers think that the most important risks in the physical (oil) market are now over, maybe they want to believe it.

If mobility continues to improve globally, prices may hold up to a recent recovery, but it is very normal for the pace of gains to be modest given the potential winds from the return of supply.

Analysts expect Japan, the third largest economy in the world, to shrink more than previously expected due to the epidemic. Last week the forecast for global oil demand was lowered, and there is a lesser than expected decline in global stocks.

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