Saudi Arabia, the world's largest oil exporter, and other major oil-producing countries are likely to increase their output in August, as coronavirus lockdowns ease and demand begins to rise again.
The Organization of the Petroleum Exporting Countries, Russia and other producers are expected to modestly ease the record production cuts that they agreed to in April and later extended through July. A committee of key officials from OPEC and Russia will meet on Wednesday by videoconference to discuss their approach to the market.
The oil-producing countries want to make sure that they maintain or increase their share of the recovering market.
But analysts say that the actions by OPEC and its allies could be outweighed by the effect of the pandemic on demand. The International Energy Agency said oil demand fell by more than 16 million barrels a day in the second quarter compared with the same period in 2019.
The Paris-based group is forecasting a strong recovery but said the spread of the virus in countries like the United States and Brazil and elsewhere "is casting a shadow" over the outlook by raising the prospect of further lockdowns that could discourage driving and other activity.
Total demand for gasoline in the United States rose in early July, a big month for driving, the agency said, citing data from the research firm Kayrros, but it fell in Texas, Arizona and Florida, which have seen big surges in reported cases.
"We could be in for a second dose of falling demand," said Bill Farren-Price, a director at RS Energy Group, a market research firm.
Oil prices have been on a wild ride in the last few months. They plummeted in April into negative territory, despite the deal days earlier by OPEC and the other oil-producing nations for deep cuts in their May and June production. But a month later, oil prices climbed back above $30 a barrel.
In early June, with road traffic, air travel and other activity still depressed, the group, known as OPEC Plus, decided to extend the 9.7 million barrel-a-day cuts through July.
Unless there is a change in thinking, the production cuts will ease to 7.7 million barrels a day — still a large amount — in August, as agreed in April.
New York Times