What does OPEC Plus have to do? With compliance at 103% percent and the global crude glut evaporating, they still have to worry about a faltering economy.
That is the assessment from the International Energy Agency (IEA) that is giving OPEC Plus its due for reducing the oversupply of crude but warning that the possibility that global economies may falter with a potential second wave of Covid-19 is weighing on a market that is worried about the same things.
Reports overnight say that Saudi Crown Prince Mohammed bin Salman and Russia President Vladimir Putin urged OPEC+ oil producers to stick to agreed production cuts, increasing pressure on other members to deliver promised output curbs. During a phone call, the two leaders reviewed global oil-market conditions and are pressing them saying that they need to stay the course and build on their success in case demand falters.
The IEA also points out that returning supply from Libya has more than offset lost supply from Hurricane Delta and the short lived Norway strike. And while they acknowledge that US oil production was down 1.7 million barrels a day from a year ago, it is again on the rise hitting an average production rate of 11.1 million barrels of oil per day.
Crude oil is hanging around $40.00 a barrel and it is perplexed on whether it should look at the trend in global oil inventories that are definitely falling, or cower in fear about a potential demand drop to come.
Well, this week’s oil inventory numbers are not going to help much. Inventories are famously all over the board as a hurricane comes in and while we will not see the full impact on supply and demand disruptions in tonight’s one day holiday delayed American Petroleum Institute (API) report.
The numbers will be skewed enough and will cause more confusion than really shed any light. The OPEC Plus call by Saudi Crown Prince Mohammed bin Salman and Russia President Vladimir Putin is supportive assuming other players play along.
Bloomberg News reports that, “ConocoPhillips (NYSE:COP) is in talks to acquire rival Concho Resources Inc (NYSE:CXO), according to people familiar with the matter, as one of America’s largest independent oil explorers looks to make a bold bet on shale during an historic industry downturn.
The companies may announce a deal in the next few weeks, said the people, who asked to not be identified because the matter isn’t public. Shares of Concho declined 1.3% in New York trading Tuesday, giving the Midland, Texas-based company a market value of $8.7 billion.