Two prominent forecasters, the International Energy Agency and the Organization of the Petroleum Exporting Countries, trimmed their 2020 oil demand forecasts this week. OPEC and its allies are increasing output this month.
“Pessimism about this year’s oil demand growth prospects is due to the weakening outlook in the coming months,” said Stephen Brennock of oil broker PVM.
“To make matters worse, global oil supply is on the upswing.”
Brent crude was 1 cent lower at $44.95 by 1210 GMT, heading for a rise of 0.6% this week. U.S. West Texas Intermediate CLc1 was unchanged at $42.24.
“Although both contracts continue to consolidate at the upper end of their two-month trading ranges, they lack the momentum to stage meaningful rallies at this stage,” said Jeffrey Halley of brokerage OANDA.
Prices had been bolstered this week by U.S. government data showing crude oil, gasoline and distillate inventories all fell last week as refiners ramped up production and demand for oil products rose. [EIA/S]
Oil has recovered from lows touched in April, when WTI briefly turned negative. Still, a rise in the number of novel coronavirus infections has limited gains. India reported another record daily rise in cases on Thursday.
OPEC and allies including Russia, a group known as OPEC+, have cut output since May by around 10% of pre-pandemic global demand to support the market. The deal calls for an increase in output this month as demand recovers.