Oil prices have dropped due to surging Covid-19 cases around the world despite OPEC+ stating that it is fully adhering to supply cuts to support prices.
Brent crude futures decreased by $0.22 to reach at $45.15 a barrel while the US West Texas Intermediate (WTI) futures fell by $0.23 to reach $42.66 a barrel, Reuters reported.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, made output cuts since May to handle the economic fallout as a result of the Covid-19 outbreak.
Starting from 1 August, OPEC+ eased the production cuts to 7.7 million barrels per day (Mbpd), from a previous reduction of 9.7Mbpd from May until July.
The news agency cited two OPEC+ sources as saying that compliance with the group’s supply cuts stood at 97% last month.
As part of its H1 earnings announcement, Australian miner and oil producer BHP said: “We believe that the most significant risks to the physical (oil) market have now passed.
“Prices may well build upon their recent recovery if mobility continues to improve globally.
The firm also warned that ‘the pace of gains though could be modest given potential headwinds from supply returning’.
According to analysts, Japan’s economy would probably sink more than earlier expected due to the Covid-19 crisis.
Last week, the Energy Information Administration (EIA) said that the US crude oil production is forecast to decrease this year by 990,000bpd to 11.26Mbpd, a sharper decline than the 600,000bpd forecast last month.