U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday and could end the week with a loss after OPEC and other major producers including Russia agreed to ease record supply curbs from August.
The move is risky because the rise in coronavirus infections in the United States and around the world could lead to a second round of demand destruction if the outbreak cannot be contained. However, some traders are downplaying the threat, citing tightening global inventories and a pick-up in the economy as reasons to remain optimistic.
OPEC+ Says Production Cuts Will Be Tapered
OPEC and its allies agreed on Wednesday to scale back oil production cuts from August as the global economy slowly recovers from the coronavirus pandemic.
OPEC+ has been reducing output since May by 9.7 million barrels per day, or 10% of global supply, but from August, cuts will officially taper to 7.7 million bpd until December.
Despite the official OPEC+ accord, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said production cuts in August and September would end up amounting to about 8.1 million-8.3million bpd, more than the headline number. That’s because countries in the grouping which over-produced earlier this year would compensate by making extra August-September cuts, the minister said.
International Energy Agency Executive Director Fatih Birol said on Wednesday that global oil markets…