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In operations on Thursday (17), OPEC + emphasized the importance of following the production reduction agreement in its monthly meeting to encourage the rise in crude oil futures prices.
Bjornar Tonhaugen, head of oil market at Rystad Energy, said: “As I feel the strong support of OPEC +, it increases the confidence of market participants and makes them believe that if everything does not improve, OPEC + can offer a rescue and encourage the rise in oil prices. “
OPEC + held a JMMC meeting via video on Thursday to discuss current production cuts. OPEC + will scale back production cuts from 9.7 million barrels per day to 7.7 million barrels per day from August, but it also requires countries that have not made production reduction commitments previously to reduce production. compensatory.
The JMMC statement indicated that it would recommend to the OPEC meeting to approve the extension of the compensation mechanism, extending the original deadline from September to the end of December. The source noted that the committee also set the overall integration rate of OPEC’s August production reduction agreement + at 102%, including Mexico.
JMMC Chairman and Crown Prince Abdulaziz bin Salman, Saudi Arabia’s Minister of Energy, stressed that all countries must fully confirm their production adjustments, and delaying compensatory production cuts should not become the norm.
Cailin Birch, a global economist at The Economist Intelligence Unit, said OPEC + has once again encountered “a worrying weakness in world oil prices and uncertain demand prospects.”
This week’s IEA report noted that OPEC + compliance with the August production reduction agreement reached 97%, up from 89% in July.
“This means that Saudi Arabia’s efforts to crack down on countries that previously exceeded production targets have been effective, such as Iraq and Nigeria. Both countries have cut production significantly in August to make up for previous overproduction.”
JMMC will hold its next monthly meeting on October 19. The next OPEC meeting and OPEC + meeting scheduled will take place on November 30 and December 1.
- WTI crude oil futures for October delivery rose 81 cents, or nearly 2%, to close at $ 40.97 a barrel, the highest closing price since Sept. 3 of the prior month’s contract.
- The price of Brent crude futures for November delivery rose US $ 1.08, or nearly 2.6%, to close at US $ 43.30 a barrel.
The relatively dynamic crude oil situation on Thursday stands in stark contrast to the weakening of world equity markets.
Investors are also paying attention to the development of the Gulf of Mexico after Hurricane Sally.
The secondary storm, Hurricane Sally, hit the Alabama coast early Wednesday morning, and although it has since been downgraded to a tropical storm, fatal flooding still occurs in parts of California. According to estimates by the Office of Safety and Environmental Compliance (BSEE) of the Ministry of the Interior on Thursday, Hurricane Sally caused the Gulf of Mexico to close 30.69% of crude production capacity and approximately 24.73% of natural gas production capacity.
Closed crude production capacity on Wednesday was 27.48% and closed natural gas production capacity was around 29.7.
“There are several factors that continue to put downward pressure on crude prices in the near future. One of them is that the August storm caused a drop in crude production, but production will increase in September,” Birch said.
“On the demand side, the boxes of new global kronor are still at a high level, so it may be necessary to implement social distancing restrictions in winter. Therefore, we expect the recovery of oil consumption crude oil in the fourth quarter of this year is flat, which is in line with our expectations for the world economy. “
Other energy raw materials
- The price of gasoline futures for October delivery rose 3% to close at $ 1.2244 a gallon.
- The price of hot oil futures for October delivery rose nearly 3.9% to close at $ 1.1598 a gallon.
- The price of natural gas futures for October delivery plunged 9.9% to close at US $ 2,042 per million Btu, extending Wednesday’s 4% drop.
The EIA announced Thursday that as of the week of September 11, the national supply of natural gas increased by 89 billion cubic feet, more than expected.
According to a survey by S&P Global Platt, analysts expect natural gas supply to increase by 77 billion cubic feet last week.
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