Oil Prices Remain Steady Despite U.S. Stockpiles
Oil prices remained steady on Monday, August 11th, despite a report from the U.S. Energy Information Administration (EIA) that showed a larger-than-expected increase in U.S. crude stockpiles.
EIA Report
The EIA reported that U.S. crude inventories rose by 1.7 million barrels in the week ending August 8th, compared to expectations of a 1.2 million barrel increase. The report also showed that gasoline inventories fell by 1.3 million barrels, while distillate inventories rose by 1.2 million barrels.
The report was seen as bearish for oil prices, as it suggested that demand for oil products was not as strong as expected. However, oil prices were able to remain steady, as the market was supported by ongoing supply cuts from OPEC and its allies, as well as hopes for a recovery in demand.
OPEC+ Supply Cuts
OPEC and its allies, known as OPEC+, have been cutting production since May in an effort to support oil prices. The group agreed to extend its production cuts until the end of the year, and is expected to keep the cuts in place until demand recovers.
The group is also expected to discuss further production cuts at its next meeting in September. This could provide further support for oil prices, as it would reduce the amount of oil on the market and help to balance supply and demand.
Demand Recovery
Oil prices have been supported by hopes for a recovery in demand, as countries around the world begin to ease restrictions put in place to contain the spread of the coronavirus.
The International Energy Agency (IEA) recently raised its forecast for global oil demand in 2020, citing an improvement in economic activity in some countries. The IEA now expects global oil demand to fall by 8.1 million barrels per day (bpd) this year, compared to its previous forecast of a 9.3 million bpd decline.
Oil Prices
Oil prices have been volatile in recent weeks, as traders weigh the impact of rising coronavirus cases in some countries against hopes for a recovery in demand.
Brent crude, the international benchmark, was trading at $45.20 a barrel on Monday, down slightly from its previous close. U.S. West Texas Intermediate (WTI) crude was trading at $42.50 a barrel, also down slightly from its previous close.
Outlook
Oil prices are expected to remain volatile in the near term, as traders continue to weigh the impact of rising coronavirus cases against hopes for a recovery in demand.
The market will also be watching for further developments from OPEC+, as the group is expected to discuss further production cuts at its next meeting in September. Any further cuts could provide further support for oil prices, as it would reduce the amount of oil on the market and help to balance supply and demand.