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Oil edges lower as suppliers try to hold line on output cuts

Published 08/18/2020, 08:36 AM
Updated 08/18/2020, 08:40 AM
© Reuters.
LCO
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TOKYO, Aug 18 (Reuters) - Oil prices edged lower on Tuesday,
mostly holding onto overnight gains after OPEC+ said the
producer grouping is almost fully complying with output cuts to
support prices amid a drop in demand for fuels due to the
coronavirus pandemic.
Brent crude LCOc1 was down 6 cents, or 0.1%, at $45.31 a
barrel by 0027 GMT, after gaining 1.3% on Monday.
U.S. crude was down 8 cents, or 0.2%, at $42.81 a barrel,
having risen 2.1% in the previous session.
Compliance with OPEC+ oil output cuts was seen at around 97%
in July, two OPEC+ sources told Reuters. The oil producers
curbed output by record levels to reduce worldwide inventories,
as demand collapsed from the pandemic. Still, the Organization of the Petroleum Exporting Countries
(OPEC) and allies known as OPEC+ in August reduced their agreed
cuts to 7.7 million barrels per day (bpd) from 9.7 million bpd
previously.
"The producer club cannot afford prices to slump too far, as
its members' economies rely heavily on the revenue generated by
petroleum exports," Eurasia Group said in a note.
But it noted that "U.S. producers are also taking advantage
of supply cuts led by OPEC and Russia."
The U.S. Energy Information Administration last week reduced
its global oil demand forecast, suggesting a smaller than
previously expected reduction in global inventories.

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