Oil price holds gains made on high OPEC+ compliance

Russia's Novak to join OPEC+ meeting after positive Covid-19 test

FE Team | Published: August 18, 2020 23:21:25

LONDON, Aug 18 (Reuters): Oil prices steadied on Tuesday, hanging on to gains from the previous session thanks to high compliance with production cuts from members of the OPEC+ producer group.
Brent crude LCOc1 was virtually flat at $45.39 a barrel at 0905 GMT, having gained 1.3 per cent on Monday. US crude LCOc1 edged down by 5.0 cents, or 0.1 per cent, at $42.84 after a rise of 2.1 per cent in the previous session.
A technical panel found that compliance with OPEC+ oil output cuts in July was between 95 per cent and 97 per cent, according to a draft report seen by Reuters.
The panel considered a scenario of substantial downside risk to oil demand if the coronavirus pandemic conditions worsen, the report said, calling for "vigilance and close monitoring of the implementation of the compensation for overproduction".
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, eased their cuts in August to 7.7 million barrels per day (bpd) from 9.7 million bpd previously.
The market has priced in news that the alliance's member compliance has been quite high in July, said Bjornar Tonhaugen, Rystad Energy's head of oil markets.
OPEC+ will hold a ministerial panel meeting on Wednesday.
Oil prices have started to pick up in recent months, prompting Australian miner and oil producer BHP to strike an upbeat note in its earnings on Tuesday.
"We believe that the most significant risks to the physical (oil) market have now passed," the company said, ading that the pace of gains could be modest given potential headwinds from supply returning.
Another report adds from Moscow: Russian Energy Minister Alexander Novak will join an OPEC+ ministers' video meeting on Wednesday despite testing positive for the novel coronavirus while on a work trip in Russia's far east, the energy ministry said on Tuesday.
"The minister feels good. He has no symptoms," a ministry spokeswoman told Reuters, confirming that Novak would take part in the 21st meeting of the OPEC+ group's Joint Ministerial Monitoring Committee (JMMC) on Aug. 19.
OPEC+ producers are set to review adherence to their production pact on oil output cuts at Wednesday's meeting against the backdrop of a slow recovery in demand.
Compliance with OPEC+ oil output cuts was 95-97 per cent in July, according to OPEC+ sources and a draft report seen by Reuters on Monday.
Novak is in Russia's far east as part of a government delegation headed by Prime Minister Mikhail Mishustin, who had contracted the novel coronavirus in late April.
Novak will continue working remotely for the time being, energy ministry spokeswoman Olga Golant said in a statement.