Oil prices have dropped as Organization of the Petroleum Exporting Countries (OPEC) producers cautioned about a risk to fuel demand recovery if the Covid-19 crisis persists for a long time.
Brent crude LCOc1 decreased by 34 cents, or 0.8%, at $45.03 a barrel, and US oil CLc1 was down 36 cents, or 0.8%, at $42.57 a barrel, Reuters reported.
Data released by the industry group Energy Information Administration (EIA) highlighted a decline of 1.6 million barrels in the week ending14 August.
According to the EIA data, fuel demand decreased by 14% from the year-earlier period over the last four weeks.
On 19 August, Saudi Energy Minister Prince Abdulaziz bin Salman said during the OPEC+ ministers’ panel meeting that the global oil demand should recover to ‘pre-pandemic levels’ by the fourth quarter this year.
Known as the Joint Ministerial Monitoring Committee (JMMC), the panel monitors OPEC+ supply cuts agreed earlier this year.
Abdulaziz bin Salman also urged OPEC+ partners of the kingdom to adhere to a deal regarding output cuts.
Phillip Futures commodities senior manager Avtar Sandu was quoted by Reuters as stating: “The positive outcome from the OPEC+ meeting was counter-balance (to) the EIA reporting that US oil inventories last week fell by (less than the) consensus.”
According to an OPEC+ statement, a second extended wave of Covid-19 posed a potential risk for the recovery of the oil market.
OPEC and its allies, including Russia, known as OPEC+, urged oil nations that produced above output targets in May-July to reduce further in August and September.