Oil prices rose on Thursday in the third day of positive price movements for the commodity, as the market responds favorably to OPEC’s meeting chatter.
WTI crude prices rose by more than 2% by 1:00 pm EDT on Thursday, reaching more than $41 per barrel. Brent Crude hit $43.39 by 1:00 pm EDT, a 2.77% jump on the day.
The upward price movement is despite actions on the U.S. Gulf Coast as producers start to get back online after a devastating and slow-moving Hurricane Sally.
The positive price movement can be attributed largely to OPEC’s strong chatter after today’s meeting, in which Saudi Arabia chastised noncompliant members for trying to fool the market with overproduction, and gave the laggards until December to make up for any overproduction thus far. Saudi Arabia also warned speculators not to bet against OPEC.
Oil prices, therefore, are now the highest that they’ve been in weeks.
The critical market warning, however, isn’t not to bet against OPEC. The market has a bigger problem than its supply woes.
The nagging problem with oil prices at the moment is not supply, which OPEC would love to focus on—because OPEC can control that, at least to some extent. The problem is, as it has been for months now, oil demand.
Oil demand projections from OPEC and the IEA are getting worse, not better.
Russian Energy Minister Alexander Novak expects global oil demand to recover in Q2 net year, Novak said today, as reported by Reuters. But he added that the oil demand recovery has slowed recently.
This matches projections from industry bodies that just this month were revised downward as it is becoming clear that oil demand isn’t picking up as quickly as they thought as new coronavirus cases continue to dog the oil market.
By Julianne Geiger for Oilprice.com
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