By Adedapo Adesanya
Brent crude rose on Thursday to $43.30 per barrel after gaining $1.08 or 2.56 per cent as the Organization of the Petroleum Exporting Countries and its allies stressed the importance of full compliance with output cuts during their monthly meeting.
The positive performance was also extended to the US West Texas Intermediate (WTI) crude, which appreciated by 81 cents or 2.02 per cent to trade at $40.97 per barrel.
The oil producers, collectively known as OPEC+, held a joint committee meeting via videoconference Thursday to discuss their existing program of output cuts.
In a statement, the Joint Ministerial Monitoring Committee (JMMC) said it will recommend that the OPEC Conference approve an extension of the compensation mechanism, which was set to end in September, until the end of December.
The committee also pegged overall conformity among participating OPEC+ countries in the output cut agreement at 102 per cent in August, including Mexico, citing secondary sources.
Business Post understands that this assurance boosted the confidence of market participants, making them sell higher.
Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, who is also chair of the JMMC, in his opening statement, stressed the need for all countries to fully conform to their production adjustments. He also said that not fully conforming and then compensating at a later date should not become the norm.
The group had previously tapered record production cuts of 9.7 million barrels per day to 7.7 million barrels per day starting in August. But the group has said countries that failed to previously meet their quota limits would be compensating for their overproduction.
The panel pressed laggards such as Iraq, Nigeria and the United Arab Emirates to cut more barrels to compensate for overproduction in May-July, while extending the compensation period from September to the end of December.
The JMMC will hold its next monthly meeting on October 19. The next scheduled meetings of the OPEC Conference and OPEC+ will be held on November 30 and December 1.
The OPEC news overshadowed the restart of US offshore production after Hurricane Sally passed through the Gulf of Mexico which shut down nearly 500,000 barrels per day of output.
However, worries still remain that the coronavirus pandemic could continue to curb demand as a rise in coronavirus cases in some countries may continue to heavily impact the market despite signs of economic recovery.
Global coronavirus cases around the world crossed over 30.2 million on Thursday.
Modupe Gbadeyanka