FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019. REUTERS/Angus Mordant
August 19, 2020
By Jessica Resnick-Ault
NEW YORK (Reuters) – Oil prices slipped on Wednesday as concerns lingered over soft U.S. fuel demand while global producers feared a second prolonged wave of the coronavirus pandemic was a major risk for the market recovery.
U.S. crude oil stockpiles <USOILC=ECI> fell 1.6 million barrels last week, while fuel demand was down 14% from the year-ago period over the last four weeks, Energy Information Administration data showed.[EIA/S]
“The drop in gasoline demand week-over-week was a concern. That’s still showing weakness,” said Phil Flynn, a senior analyst at Price Futures Group in Chicago. “The only thing that is holding us back is demand,” he said.
Brent crude futures <LCOc1> were down 13 cents at $45.33 a barrel by 12:32 p.m. ET (1632 GMT), but still not far off a five-month high above $46 a barrel reached earlier in August.
U.S. West Texas Intermediate (WTI) crude <CLc1> fell 7 cents, or 0.2%, at $42.82 a barrel.
Global oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi Energy minister said, while urging compliance with a global deal to cut output.
The Organization of the Petroleum Exporting Countries and its allies such as Russia, a grouping dubbed OPEC+, began a meeting on Wednesday to review the compliance levels with the deal, aimed at supporting prices. .
“Based on the average projections of various institutions, … it is estimated that the world will reach about 97% of pre-pandemic oil demand during the fourth quarter – which is a big recovery from the huge falls in April and May,” said Prince Abdulaziz bin Salman.
A draft OPEC+ statement, seen by Reuters, said a second prolonged wave of the pandemic was a major risk for the oil market recovery.
OPEC+ sources have said the group was unlikely to change on Wednesday its output policy, which currently calls for reducing output by 7.7 million barrels per day (bpd) versus a record high 9.7 million bpd up until this month.
(Reporting by Yuka Obayashi in Tokyo i and Dmitry Zhdannikov in London; Editing by Marguerita Choy and Mark Potter)