Oil Up, Boosted by Continuing Efforts to Curb Output

Oil was up on Friday morning in Asia, looking to end the week with a third straight week of gains boosted by producer efforts to cut output as concerns over the global economic recovery from COVID-19 increase.

Brent oil futures rose 0.33% to $45.05 by 12:19 AM ET (5:19 AM GMT) and WTI futures were up 0.28% to $42.94. Both benchmarks saw losses during the previous session on the back of U.S. data released on Thursday that showed more than one million initial jobless claims during the past week.

Following its joint ministerial monitoring committee meeting on Wednesday, OPEC+ continues to focus on member compliance to agreed cuts, with a particular focus on members who have not done so, who could face production cuts of 2.31 million barrels daily as compensation.

“They’re really focusing on the compliance from OPEC members. They’ve called out Iraq and Nigeria for not complying. That’s all been very good for supporting prices,” BetaShares Capital chief investment officer Louis Crous told Reuters.

An OPEC+ internal report said that oil demand is forecast to fall by 9.1 million barrels per day (bpd) in 2020, a 100,000 drop from its previous forecast.

But the report warned that the demand drop could increase by 11.2 million bpd if a prolonged second wave of COVID-19 hits countries such as the U.S., China, India and Europe in the second part of the year.

“My expectation would be demand continues to be quite a bumpy recovery,” National Australia Bank (OTC:NABZY) head of commodity research Lachlan Shaw told Reuters.

Some investors predicted that Brent futures could remain near the $45-mark but were pessimistic about a further climb in the short run.

“It’s difficult to see conviction either way. From a seasonal perspective, you’d probably anticipate things to weaken a bit,” Shaw added.

Meanwhile, Chinese buyers have reportedly chartered around 19 tankers for September to transport a record order of roughly 37 million barrels of U.S. oil to China. Should the order be placed as planned, it would smash May’s record of 35.2 million barrels, and would be an indication that China is ramping up purchases to meet its commitments under the phase one trade deal between the two countries.