The Organization of Petroleum Exporting Countries (OPEC) and its sister members have asked the Joint Technical Committee (JTC) to monitor underperforming members in the extended production cuts.
The body also requests that all underperforming nations including Nigeria, Iraq and others submit their plans for implementation of the “required compensation” for the month of June to the Secretariat by the end of the month.
This was revealed in the recent 20th virtual meeting of the Joint Ministerial Monitoring Committee (JMMC). The body also commended Gulf nations like Saudi Arabia, Kuwait and the United Arab Emirates for making voluntary cuts to their production to keep the price stable. Oil production reached its lowest in nearly 30 years due to the production cuts of 9.6 million barrels.
Meanwhile, the Organization plans to reduce its production cut from 9.6 million barrels a day to 7.7 million barrels, OPEC expects the increase in supply to be offset by countries like Nigeria that did not meet full compliance on production cuts. Nigeria will join Iraq and Angola by engaging in a further 842,000 barrels a day of cuts through September.
OPEC agrees that a full 100% conformity for all members is fair deal, that is important to move the body to a unified voice in the future and deliver on long term goals. Adding that despite partial lockdowns, the recoveries in demand is clear. Adding that the extra supply from the ease in productio9n would be consumed locally be oil exporters as their economies reopen for business.
OPEC agrees that the new compensation policy was agreed by the nation affected and would lead to deeper level of adjustments.
Brent Crude price trades at $45 per barrel, as fuel demand picks up
Brent crude held most of it gains from the previous trading session.
Brent Crude oil prices dropped slightly at Asia’s trading session.
Brent crude prices held most of it gains from the previous trading session after U.S. government data showed a fall in U.S Crude Stockpiles supporting the view that fuel demand is picking up despite the COVID-19 pandemic.
Brent crude was slightly down by 0.07% to trade at $45.40 a barrel by 04.32 GMT, after a gain of around 2% in the previous session.
Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oil. The international benchmark is used to set the price of crude oil of about two-thirds of the world’s traded crude oil including Nigeria’s crude.
However, Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics, revealed vital macros, that could keep crude oil relatively stable in the coming days. He said;
“But even worries around stalled US fiscal talks are partly offset by the US administration’s conciliatory tone on China’s compliance with the ‘Phase One’ trade deal.
“The upcoming six-month assessment seems unlikely to prompt any significant fireworks. Also, investor’s optimism remains high on a vaccine cure that is no longer being viewed as a pie in the sky.
“Finally, the US dollar’s weakness helps Oil prices in general, but even more so in this environment, as the weaker US dollar reflects a global “risk-on” environment, not a flagging US economy. “
Download the Nairametrics News App
Global COVID-19 cases now exceed 20 million, so in the absence of meaningful progress on a COVID-19 vaccine, traders are still looking over their shoulders to where new lockdowns might be necessary.
Gold prices drop below $1,900 after U.S dollar strengthens
The plunge came as appetite for risk assets recovered thanks to a stronger greenback and real rates.
Gold prices dropped sharply on Wednesday at London’s trading session. Gold futures were down 2.69% to trade at about $1,893.20 as at the time this report was drafted.
The plunge came as appetite for risk assets recovered, thanks to a stronger greenback and real rates. The U.S dollar is up on Wednesday, continuing to rise from its two-year lows.
The present huge sell-offs recorded in the precious metal market astonished many gold traders after the per-ounce price of the yellow metal plunged below $1,900.
Here’s an Insight: Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the macros, giving Gold bears such strength, as the precious metal continues its sudden downward trend. He said;
“The real pain trade gold as swollen positions got hit with the truncheon, and gold plunged the most in seven years as the bottom fell out of the markets with US Treasuries and bunds bear-steepening and real yields higher.
“Gold markets sold off picking speed exponentially as freshly minted gold longs ran for the exit.
“And in typical low liquidity August fashion, market makers were merciless pounding gold to within a hair’s breadth of $1900 as the steam roller got heading downhill when the afternoon Shanghai session saw waves of Asia banks selling en masse.”
Whether or not gold can regain its previous highs will depend on whether there is more room for downside in real yields or more dovish policies by the US Federal Reserve. Still, the possibility of squeezy price action remains in play after the US Bond market sent out the most explicit warning last week.
Gold price loses $80 following Russia’s COVID-19 vaccine approval
This marks gold’s steepest daily decline in nearly five months.
Gold futures have lost about 5% or $80 in less than four hours, at the London trading session this afternoon.
Gold futures fell as low as $1,950 per ounce, $80 differential from its opening price of $2,030
This marks gold’s steepest daily decline in nearly five months, even as global stocks went bullish following news that Russia’s COVID-19 vaccine has obtained regulatory approval.
The COVID-19 vaccine approval by Russia was met with some skepticism by experts.
Russian President Vladimir Putin announced on Tuesday that a locally developed vaccine for COVID-19, Sputnik-V, has been given regulatory approval and is ready for use.
Russian Health Minister Mikhail Murashko said that the vaccine had “proven to be highly effective and safe”, with mass vaccination planned to start in October.
But health regulators elsewhere have cast doubts on the vaccine, as it has not yet gone through safety trials and Russia did not offer any scientific evidence of the vaccine’s effectiveness and safety.