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by Stockwatch Business Reporter
West Texas Intermediate crude for August delivery added 91 cents to $41.20 on the New York Merc, while Brent for September added 89 cents to $43.79 (all figures in this para U.S.). Western Canadian Select traded at a discount of $9.95 to WTI, unchanged. Natural gas for August added three cents to $1.78. The TSX energy index added 1.62 points to close at 78.58.
Citing "encouraging signs of improvement as economies around the world open up," the members of OPEC+ went ahead with plans to taper their production cuts starting Aug. 1. The group cut a record 9.7 million barrels a day in May and June and plans to keep doing so in July. From August until December, however, the figure is scheduled to drop to 7.7 million, representing a supply increase of two million barrels a day.
Saudi Energy Minister Prince Abdulaziz bin Salman insisted that markets will "barely feel" the increase. Not only are the signs of demand recovery "unmistakable," he said at today's meeting, but the 7.7-million-barrel-a-day figure does not account for the extra cuts that must be made by countries that overproduced in previous months. Members including Iraq, Nigeria and Kazakhstan did not honour their quotas and are supposed to compensate for that in the coming months. The exact compensation levels are not quite clear (nor is it clear how OPEC+ proposes to enforce them), but Prince Abdulaziz put the level of effective cuts around 8.1 million to 8.2 million barrels a day. A separate OPEC+ document seen by Reuters put the number even higher, at 8.54 million. Still others put the number closer to 8.7 million.
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