Crude oil prices remained relatively stable at Tuesday’s trading session. Investors and oil traders stayed cautious, ahead of an OPEC+ meeting scheduled for Thursday.
At the time this report, Brent crude futures were a bit down by 0.1% to trade at $39.57, and WTI futures were lower by 0.03% to trade at $37.27. Both international benchmarks continue to remain below the $40 price level.
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The resurgence of COVID-19 continues to distort the recovery of fuel demand, with the number of global cases exceeding 28.9 million as of September 15, according to the WHO.
On Monday, OPEC downgraded its demand forecast ahead of the OPEC+ meeting scheduled to hold in two days’ time. The meeting will discuss compliance with April’s production cuts, which were eased in August, but further cuts are not expected.
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Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke on the recent downgrade in the outlook for oil demand amidst the resurgence of the COVID-19 virus.
“OPEC has also downgraded its outlook for global demand, which raises the obvious question of why they prematurely eased production cuts last month,”
“But will OPEC blink Thursday and fend off the oil glut, as the resurgence of coronavirus still weighs on the demand outlook? Price action so far says the market does not think so,”
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“To a degree, some of this angst was expected after the initial demand rebound, and easing of emergency OPEC+ production cuts. Still, it will likely take 18 months or more to repair the damage done in H1, 2020.”
Crude oil prices are expected to recover slowly once economic activities rebound globally.
