Similarly, warnings of massive storage build-ups have re-affirm fears that the worst may not yet be over for oil prices.
Brent Crude traded lower yesterday at $42.95 per barrel at 4:35pm local time, while Nigeria’s Bonny Light traded at $43.63 per barrel, down by 0.14 per cent. Including its 10 partners in a historic supply accord, the alliance known as OPEC+ delivered 106% of its committed production cuts, according to Platts calculations, a rise from May’s 85%.
“The U.S. is not alone as the virus continues to spread like wildfire across the globe, notably in Brazil, India, and even here in Nigeria. In our 2020 Mid-Year Outlook, we forecast a slight rebound in demand over the course of H2-20. The analysts noted that while the one-month extension of the production cut agreement will expire by July end, with the group signalling a desire to ease production cuts, from 9.70mb/d to 7.70mb/d in August, additional 2.0mb/d worth of supply into the market as demand weakens, would be sub-optimal for crude prices.
“In our view, a ‘second wave’ will lead to further increases in inventories. Without the ability to drain them, combined with a widening divergence between supply and demand, we reiterate that there is little room for oil prices to rise,” Cordros’ analysts added.
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