Oil dips on demand fears as OPEC+ considers output
increase
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[July 14, 2020] By
Shadia Nasralla
LONDON (Reuters) - Oil prices fell on
Tuesday on worries that new restrictions to stem surging U.S. and Asian
coronavirus cases could threaten a recovery in fuel demand just as OPEC+
producers prepare to increase output from August.
Brent crude futures fell 44 cents to $42.28 a barrel by 0840 GMT and
U.S. West Texas Intermediate (WTI) crude futures slid 53 cents to
$39.57.
The governor of California, the United States' most populous state, on
Monday ordered bars to shut and restaurants, movie theatres, zoos and
museums to cease indoor operations as coronavirus cases soared.
California's moves follow the recent reinstatement of some restrictions
in other states, such as Florida and Texas. New restrictions were also
introduced in Asia and Australia.
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On the suppy side, markets are keenly awaiting news from Organization of
the Petroleum Exporting Countries (OPEC) and its allies, collectively
known as OPEC+, on the next level of production cuts. OPEC's Joint
Technical Committee meets on Tuesday, with the Joint Ministerial
Monitoring Committee due to meet on Wednedsay.
Under the existing supply pact, OPEC+ is set to taper its record
production cut of 9.7 million barrels per day (bpd) to 7.7 million bpd
from August through December.
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A pump jack on a lease owned by Parsley Energy operates in the
Permian Basin near Midland, Texas U.S. August 23, 2018. Picture
taken August 23, 2018. REUTERS/Nick Oxford/File Photo
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The oil market is moving closer to balance as demand gradually rises, OPEC's
secretary general said on Monday.
China's June crude oil imports hit both daily and monthly highs, data showed on
Tuesday.
However, Citi analysts said that the looming supply increase could weigh on
prices given demand uncertainties. Morgan Stanley said oil demand is unlikely to
exceed pre-COVID levels until late 2021.
The market will also be watching for fuel consumption data due on Tuesday from
the American Petroleum Institute industry group and on Wednesday from the U.S.
Energy Information Administration.
Analysts estimate that U.S. gasoline stockpiles fell by 900,000 barrels and
crude oil inventories by 2.3 million barrels in the week to July 10, a
preliminary Reuters poll showed.
(Additional reporting by Sonali Paul in Melbourne and Shu Zhang in Singapore;
Editing by David Goodman)
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