Brent crude and US crude rallied in early Thursday trade after sharp sell-off on the back of both weak demand and expectations that the OPEC+ will not raise output as earlier predicted. November Brent crude futures extended gains, adding 9 cents to $72. 79 a barrel while the US WTI crude futures for October were up by 12 cents at $69. 32. Wednesday both benchmarks fell more than 1 percent, closing $1 lower.
OPEC+ is now on the brink of delaying the oil production increase that was scheduled in October due to the prices experienced today that have reached the lowest in the next nine months. The group that comprises OPEC and friends including Russia had intended to raise output by 180,000 barrels daily in October as part of a rebalancing exercise after years of cuts. However, today’s cut in demand especially from China and the Libyans’ export resumption has forced a rethink.
Here, ANZ analysts highlighted that there was some easing in the early trading due by the discussions of OPEC+, below regional demand is a lament. Factory activity in China has continued to shrink in August for the fourth month in a row taking its toll on oil prices. This Asian giant, which is currently the world’s largest crude importer, suffers from low levels of manufacturing and weak demand.
On the other hand, domestic crude supply however decreased by 7. 4 million barrels in the past week, API revealed, this is much higher than market forecast. They now turn to the EIA for the actual supply levels to enhance their understanding on the situation.
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