Is The Oil Market Healthy Again? Signs Are Mixed
Ellen Wald | Jul 02, 2020 08:58
As most of the world recovers from the coronavirus pandemic and enforced economic shutdowns, signs for the health of the oil market are mixed.
OPEC+ seems poised to ease its production cuts in the second half of the summer, although that’s not yet a done deal. And while offshore storage has dropped, the glut isn't necessarily gone. Adding to the conflicting picture: news about oil demand from countries like India and the United States is varied.
Optimists are happy, but pessimists have several data points on their side too. Below we take a deeper look at where the oil market stands:
1. Production To Rise In August/h2
Last month OPEC extended its production cuts for July. Now July has arrived and market watchers are closely observing the group for August guidance.
Currently, signs point towards OPEC+ lifting production by about 2 million bpd between July and August. According to utilization (94% for the week ending June 28 compared to 73% the week prior) along with a slight decrease in demand for motor gasoline.
The greatest concern for U.S. demand is that high numbers of positive tests are leading some jurisdictions to heighten restrictions, which in turn lead many Americans to cut back economic activity. Although hospitalizations and particularly deaths appear to be down, fear of a virus resurgence is influencing the economy in ways we cannot yet measure.
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