Oil falls after OPEC Plus agrees to reduce “cut”

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Oil prices fell, on Thursday, after OPEC and its allies, led by Russia, agreed to reduce record supply restrictions from August, but hopes of a rapid recovery in demand in the United States after a massive drawdown in crude inventories contained a decline.
Brent crude fell 33 cents, or 0.8%, to reach $ 43.46 a barrel. US West Texas Intermediate crude fell 42 cents, or 1%, to $ 40.78 a barrel. Prices rose 2% on Wednesday, driven by lower US crude stocks.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC Plus, agreed on Wednesday to reduce oil production cuts from August with the global economy slowly recovering from the consequences of the emerging Corona Virus pandemic.
OPEC Plus has cut production by 9.7 million barrels per day since May, equivalent to 10% of global supplies, but as of August, cuts are officially scheduled to decrease to 7.7 million barrels per day until December.
Data from the US Energy Information Administration showed that US stocks of crude oil fell by 7.5 million barrels last week, compared to analysts’ estimates in a Reuters poll of 2.1 million barrels.
Despite the official OPEC Plus agreement, Saudi Energy Minister Prince Abdulaziz bin Salman said that production cuts in August and September would eventually reach between 8.1 and 8.3 million barrels per day.
The reason, the minister added, is that countries from the group overproduced earlier in the year will compensate for this through additional cuts in August and September.
Fatih Birol, CEO of the International Energy Agency, said on Wednesday that the balance is slowly returning to the global oil markets after the shocks that occurred during the closures imposed by governments around the world to contain the Corona virus.
Birol added that oil prices are expected to reach about $ 40 a barrel in the coming months. (Reuters)





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