Oil price rises to $40

Oil price rises to $40”

Oil has clawed its way back to $40 a barrel this week despite bearish calls for the market from the International Energy Agency and industry players such as BP Plc and Trafigura Group.

India now has the second most number of COVID-19 cases in the world with almost 5 mln cases and only lags behind the US.

OPEC and its allies will discuss the gloomier outlook for demand and rising inventories when its joint ministerial monitoring committee meets later this week online.

Increasing oil output and the downgraded demand outlook also mean a slower draw on stocks which piled up at the height of lockdown measures, it added.

"As much as a feel-good factor appears to have returned to the oil market, underlying fundamentals remain far from supportive".

While noting that India's oil demand decline accelerated to around 0.7 million barrels daily (b/d) year-on-year in August - compared to a decline of 0.5 million b/d in July, Barkindo said: "Under the current circumstances, it will be challenging for oil demand to return to growth before 2021". "Prices got additional support as more than 25% of offshore oil and gas production is shut in the Gulf of Mexico".

More news: High food prices keep Indias retail inflation above 6% in August

The latest fall in the price of crude‎ oil is coming on the heels of projections by the ‎Organisation of Petroleum Exporting Countries‎ that demand for the commodity will rebound more slowly than expected next year. "We expect more oil output cuts if oil price fall continues", said Yogesh Patil, a senior research analyst at Reliance Securities.

But even OPEC, which has been trying to create a floor for oil prices and balance the production, has struggled to deal with destruction in demand caused by the pandemic. "They're going to do whatever they can do to kick start the economy and keep the economy going". Crude oil prices gained as Hurricane Sally disrupted U.S. offshore oil production and sharp drawdown in United States crude inventory. "We are now in the second phase of our voluntary production adjustments", Barkindo said. Prices at the time briefly hit their highest prices since early March.

In the futures market, crude oil for September delivery touched an intraday high of Rs 2,896 and an intraday low of Rs 2,845 per barrel on MCX. "Alternatively, if more refineries are forced to close, due to strong competition, Asian refiners would be in a better position to capture a larger market share, which would provide room for more crude imports".

That follows Monday's move by OPEC to cut its outlook this year by 400,000 barrels.

US energy companies were starting to return crews to offshore oil platforms in the Gulf of Mexico after Hurricane Sally halted operations for five days, shutting down output of almost 500,000 barrels per day (bpd).

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