Arab News, Sunday, Sep 20, 2020 | Safar 03, 1442
Oil bounces back amid KSA pledge
Saudi Arabia: Oil prices ended their downward trajectory that
started early September and recorded their biggest weekly gain in three months.
The rebound came despite plenty of bearishness in the market that was emphasized
by the monthly oil reports from both OPEC and the International Energy Agency (IEA).
However, OPEC’s latest reassurances to its commitment to balance the market
spurred confidence and pushed up prices higher.
Both international benchmarks rose above the $40 barrier with Brent hitting
$43.15 per barrel and WTI crude price rising to $41.11 per barrel.
The IEA monthly oil market report described a fragile market with the the
pandemic refusing to loosen its grip on economies.It highlighted such
unfavorable fundamentals as well as poor refining margins and a continued
increase in OECD global oil stocks to record levels. It also pointed to a
growing overhang of unsold barrels that triggered a steady fall in prices into
September while reports of floating storage also weighed on market sentiment and
decreased the likelihood of any short term recovery in demand.
Even the lower crude oil output from the US Gulf of Mexico due to Hurricane
Sally and the higher-than-expected decline in US crude stockpiles were
downplayed.
Despite half a million barrels per day worth of offshore US production being
shut down in the Gulf of Mexico, Hurricane Sally did not impact operations as
heavily as Hurricane Laura earlier in the month.
Notwithstanding such factors, oil prices had been tracking down until last week
when the market started to gain momentum after Saudi Arabia reaffirmed its
commitment to OPEC+ output cuts during the Joint Ministerial Monitoring
Committee.