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Bloomberg
Oil edged lower with a weaker demand outlook underscored by Opec’s decision to taper production cuts and US economic data signaling a slowing recovery in the labour market.
After hitting a four-month high, US crude futures fell as much as 1.5% on Thursday. Next month, Opec+ plans to add at least 1 million barrels a day of supply to the market after almost three months of historic curbs to ease the impact of the coronavirus pandemic.
Oil also came under pressure as equities weakened in the US, Europe and Asia. US Labour Department figures showed the number of Americans filing for unemployment barely dropped last week, signaling the labor-market recovery is stalling as virus cases surge around the country.
The Opec and its allies will withhold 7.7 million barrels a day from the market in August, compared with 9.6 million currently. The actual cut next month will be 8.1 million to 8.3 million barrels a day due to the compensatory curbs from members including Iraq and Nigeria.
The pace of oil-demand improvements is starting to slow, driven by a sharp pullback in the US, according to Goldman Sachs Group. Still, other parts of world are faring better: figures showed China’s economy returned to growth and expanded more than forecast last quarter.
There are pockets of strength in parts of the physical market. North Sea contracts are trading in their tightest structure in five months, highly sulfurous crudes are firmer and the futures curve has rallied.
The Organisation of Petroleum Exporting Countries and its allies will withhold 7.7 million barrels a day from the market in August, compared with 9.6 million currently. The actual cut next month will be 8.1 million to 8.3 million barrels a day due to the compensatory curbs from members including Iraq and Nigeria.
There were also signs that supplies from Russia will remain low, at least in the short-term. It will ship three cargoes of Urals crude from its Baltic ports in the first five days of August, down from five a month earlier, according to a loading program. Urals loadings were planned at the lowest in a decade for July.