Oil prices have slipped as major oil producers are concerned over the slow recovery of global fuel demand.
Short-covering ahead of a meeting this week with Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, restricted further losses.
Brent crude LCOc1 fell by $0.05, or 0.1%, to reach at $39.56 a barrel, while US West Texas Intermediate (WTI) CLc1 futures were down by $0.03, or 0.1%, to settle at $37.23 a barrel, Reuters reported.
Sunward Trading chief analyst Chiyoki Chen was quoted by the news agency as stating: “Sentiment in oil markets remained gloomy due to bleak demand outlook by oil producers and as a resurgence in Covid-19 cases in many countries fuelled concerns over a slower pick-up in global fuel demand.
“Brent and WTI are likely to stay between $35 and $40 a barrel until US demand for heating oil starts picking up as the peak driving season has ended.”
In a monthly report, OPEC said that the world oil demand will reduce by 9.46 million barrels per day (Mbpd) this year. This figure is more than the 9.06Mbpd decline expected a month ago.
Meanwhile, investors are keenly awaiting the decision of the joint ministerial monitoring committee (JMMC) by OPEC+ on 17 September.
The market monitoring panel of the OPEC+ Group will meet to discuss compliance with deep supply cuts.
According to Reuters, analysts don’t expect any further cuts despite Brent crude prices falling below $40 a barrel in the past few days.
Energy companies, ports and refiners have evacuated staff and reduced offshore production in the Gulf of Mexico as tropical storm Hurricane Sally raced towards the central US Gulf Coast.
Oil production in the region has been interrupted by storms for the second time in less than a month after hurricane Laura.
Chen added: “Still, the support is limited as oil prices came off quickly after the first hurricane passed, with energy companies being able to make proper preparations ahead of time.”