Crude oil and Brent oil both recorded a second session of gains on Wednesday as the near outlook improved.
The price of crude oil rose above the key $40 a barrel mark on the back of a relatively upbeat near-term outlook from the International Energy Agency, The IEA forecast in its latest world energy report a considerable decline in global stockpiles for the final quarter of 2020. It said that its estimates for global supply and demand indicate a 4 million barrel a day average decline in global stockpiles for the current quarter.
Wednesday’s gain’s continued a rise in oil spurred by news that Saudi Arabia and Russia reaffirmed their agreement to cut production. According to a press release from the official Saudi Press Agency:
“His Royal Highness Prince Mohammad bin Salman bin Abdulaziz, Crown Prince, Deputy Prime Minister and Minister of Defense, made a telephone call today to President Vladimir Putin of the Russian Federation.
Saudi Press Agency.
During the call, they reviewed global oil market conditions and the efforts made to achieve and maintain stability and balance, to promote the growth of the global economy.
The two sides agreed on the importance of all oil-producing countries to continue cooperating and abiding by OPEC+ agreement to achieve these goals for the benefit of both producers and consumers”.
Indian Oil Demand Improves
Another factor boosting prices was a rise in oil demand from India. The country’s top oil processor – Oil Corp., is, according to reports, currently operating its refineries at an average rate of 86% of capacity, a sizeable jump from the 66.7% recorded in August.
India is the world’s third-largest consumer of oil, accounting for around 5% of total global consumption.
Demand for oil in India fell dramatically between April to August as a result of the coronavirus pandemic. Minister of Petroleum & Natural Gas and Minister of Steel Dharmendra Pradhan said at the Energy Intelligence Forum:
“Energy demand will be normal within the next few quarters. Things are on the right track,
Dharmendra Pradhan
Oil Higher
At the time of the writing, crude oil is up 2.29%, pricing a barrel of oil at $41.12. Brent oil is up 2.26%, valuing a barrel at $43.31.
A weakening US dollar in the forex markets in North American trading is helping send oil prices higher as we head towards the closing bell.
