https://www.oilandgas360.com/crude-inventories-7-3-2020-2-2/
Total products supplied over the last four-week period averaged 18.1 million barrels per day, down by 13.1% from the same period last year. Over the past four weeks:
The OPEC+ group is easing the record 9.7-million-bpd production cuts as of August as demand has started to recover, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said at an OPEC+ panel meeting on Wednesday.
“As we move to the next phase of the agreement the extra supply resulting from the scheduled easing of production cut will be consumed as demand continue on its recovery path,” the Saudi minister said, as carried by Reuters.
The Joint Ministerial Monitoring Committee (JMMC) of the OPEC+ group is meeting on Wednesday to decide how to proceed with the cuts. OPEC+, led by OPEC’s top producer Saudi Arabia and by Russia, agreed in June to extend the record production cuts of 9.7 million bpd by one month through the end of July.
According to the original agreement from April, OPEC+ was to cut 9.7 million bpd in combined production for two months—May and June—and then ease these to 7.7 million bpd, to stay in effect until the end of the year. Then, from January 2021, the production cuts would be further eased to 5.8 million bpd, to remain in effect until end-April 2022.
There won’t be another extension of the record 9.7-million-bpd cut, according to the OPEC+ panel meeting today. The oil producers part of the pact will ease the cuts to 7.7 million bpd, but the cuts would actually be deeper than that because of the mechanism for laggards to compensate for their loose compliance in May and June, the Saudi energy minister said.
According to OPEC+ estimates seen by Reuters, the collective OPEC+ cut in August and September would be – on paper at least – some 8.54 million bpd in the next two months, as Iraq, Nigeria, Angola, Russia, and Kazakhstan would be cutting deeper to compensate for previous lack of compliance.
“This demand issue is really key here,” Andy Critchlow, a long time oil market veteran, told CNBC’s “Squawk Box Europe,” pointing to the 13-member organization’s outlook for global oil demand next year at 97.7 million barrels per day.
“That’s a car crash. Let’s face it… this is not a great look for the outlook for oil.”
While the figure is expected to mark the largest one-year jump ever recorded, it’s significantly below the already lukewarm demand figure of 99.8 million bpd recorded at the end of 2019, pre-coronavirus. And it’s a dire forecast for producers who have invested billions of dollars in boosting production capacity. For OPEC, that’s significant spare capacity that will be left untapped.
Not only that — it’s also just enough for some U.S. shale operations to survive, he said, providing some oxygen to OPEC’s American competitors. The higher the prices, the greater relief for shale.
“Brent hovering around, you know, $40, $45 a barrel at the moment, that’s not good for OPEC,” he said. “That doesn’t get them there economically. And even worse, around $45 a barrel, that’s enough to kind of keep the U.S. oil industry, the shale revolution on its legs. So you’ve kind of got the worst of both worlds for OPEC.“
On the other hand, extending the historic production cuts of 9.7 million bpd that the OPEC and non-OPEC alliance began in May could be seen as self-defeating, pushing prices too high and derailing the fragile demand recovery of the past several weeks.