International oil prices weakened, with Brent oil hitting a one-week low, as the market worried that some countries may usher in a second wave of coronavirus outbreaks and extend travel restrictions. Industry data also shows that U.S. crude oil inventories are still increasing.
At 16:22 Beijing time, NYMEX crude oil futures fell 1.90% to US$25.83/barrel; ICE announced Lrent crude oil futures fell 2.94% to US$29.10 per barrel and refreshed a one-week low to US$28.92 per barrel.
Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries (OPEC), said at the beginning of the week that it planned to further reduce production. to balance a severe oversupply in energy markets caused by the coronavirus outbreak. However, investors expressed new concerns about the spread of the virus, which offset the positive impact of Saudi Arabia’s statement.
Anthony Fauci, the top infectious disease expert in the United States, warned in Congress on Tuesday (May 12) that premature lifting of lockdown measures could lead to further outbreaks of the new coronavirus. The epidemic has killed more than 83,000 Americans and damaged oil consumption in the world’s largest economy.
Avtar Sandu, commodities manager at Phillip Futures in Singapore, said: “Concerns about the re-emergence of the coronavirus may prompt countries to extend lockdowns, thereby damaging global economic activity and energy demand, and ultimately weakening oil prices.”
On the supply side, Saudi Arabia’s national news agency reported early on Wednesday that the Saudi cabinet has urged OPEC+ oil-producing countries to further reduce oil production in order to restore the supply and demand balance in the global crude oil market. Saudi Arabia said on Monday that it would take the lead in further cutting production by 1 million barrels per day in June, with total output falling to 7.5 million barrels per day, a nearly 40% decrease from April.
The statement reads: “The Cabinet affirms Saudi Arabia’s efforts to support the stability of the international oil market. Saudi Arabia’s initiative aims to call on countries participating in the OPEC+ agreement and other oil-producing countries to adhere to the pace of production reduction and prepare for further Cut production and do our part to restore the coveted balance in the international oil market.”
OPEC member Kuwait also followed in the footsteps of Saudi Arabia and announced that it would cut production by an additional 8% in June based on the production reduction amount agreed in the OPEC+ agreement. Thousands of barrels/day. The United Arab Emirates also said it would reduce production by another 100,000 barrels per day in June.
OPEC+ may maintain existing production cuts after June
Four OPEC+ sources said on Tuesday that oil exporting countries The Organization of the Petroleum Exporting Countries (OPEC) and its allies hope to extend the current production reduction agreement beyond June. The OPEC+ group will hold a meeting in early June to discuss how to support oil prices and demand that have been hit hard by the new coronavirus epidemic.
According to the previous agreement, OPEC+ oil-producing countries will jointly reduce production by a record 9.7 million barrels per day from May to June, and will gradually reduce production after June. 7 -The production reduction will be reduced to 7.7 million barrels per day in December, but the production reduction will continue until April 2022.
Informed sources said that Kuwait Petroleum Company (KPC) will reduce crude oil exports in June. The company has asked customers to tolerate a 5% drop in supply under so-called “operational error” clauses stipulated in contracts.
The American Petroleum Institute (API) said on Tuesday that U.S. crude oil inventories increased by 7.58 million barrels to 526.2 million barrels as of the week, while analysts expected an increase of 4.295 million barrels. The official U.S. Energy Information Administration (EIA) inventory report will be released at 22:30 Beijing time on Wednesday.
But API pointed out that inventories at the Cushing, Oklahoma delivery center fell by 2.3 million barrels. If the data is confirmed by the U.S. Energy Information Administration (EIA), it would be the first decline since February. </p
