Oil Prices Rising as Producers Talk About Efforts to Cut Supplies

Oil prices rose, and is on the path of achieving gains for the third week in a row, as it was strengthened by the efforts of major crude producers to cut production in light of concerns about the economic recovery from the Coronavirus pandemic.

US West Texas Intermediate crude futures rose 13 cents, or 0.3%, to $ 42.95 a barrel before the Tokyo Stock Exchange closed, and were heading towards a 2% rise in the week.

Brent crude futures rose 17 cents, or 0.4%, to $ 45.07 a barrel and are heading for a 0.5% increase for the week.

The two benchmarks fell about 1% on Thursday due to economic concerns, after weekly US jobless claims exceeded expectations.

An internal report by the Organization of the Petroleum Exporting Countries (OPEC) and allies revealed that the group known as OPEC + is focused on ensuring that members whose production exceeds their pledges will reduce production, as indicated after a meeting of OPEC + on Wednesday.

Reuters reported that OPEC + concluded that some members would need to cut production by 2.31 million barrels per day to compensate for the excess supplies they recorded recently.

Among OPEC members, Iraq and Nigeria were the least compliant, and even the UAE, which implemented voluntary cuts in June, recorded a production surplus of about 50,000 bpd over May and June.

The internal report also pointed to threats to demand, to show that OPEC + expects a decrease in oil demand in 2020 by 9.1 million barrels per day, which is 100 thousand barrels per day more than its previous forecast.

It also concluded that if a second, prolonged wave of infections hit China, India, Europe and the United States in the second half of the year, demand could decline by 11.2 million barrels per day in 2020.