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Brent crude rose 60 cents or 1.5% to $41.13 whilst WTI was up 68 cents or 1.8% to $38.96. Both contracts rose over 2% on Tuesday.
The market sentiment around crude remains bearish given announcements from BP regarding oil demand and how that may have peaked in 2019, on top of the news that OPEC has revised demand figures downwards as Chinese demand cools off. The drop off in demand was expected by the organisation, but the rate of decline was not.
COVID-19 continues to depress the oil market with recovery being halted due to borders still shut and air travel operating at a fraction of its normal levels.
Hurricane Sally made landfall on Tuesday which caused havoc within the Gulf of Mexico with some estimates stating that output may be reduced by 3 million to 6 million barrels over the next 11 days. The heavy rains that are due in the region are also expected to dampen demand as many of the Gulf’s ports close due to rough seas. This is expected to reduce stockpiles, albeit only slightly which is much needed in the current environment of supply gluts, yet according to the API, supplies are falling with a reported 9.5 million barrel draw last week, with gasoline inventories on the
increase by around 3.8 million barrels last week.
Iran has shown support for OPEC this week but on the condition that it protects its interests according to Iran’s OPEC governor. The countries OPEC output has halved from levels of 7.5% in 2010 but remains certain that it is in the best interests of the nation. This comes just days before the next OPEC meeting in which it is likely that new quotas will be issued for its members in order to act to stabilize prices.
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