By Adedapo Adesanya
Oil prices were bearish on Tuesday as demand fears from the coronavirus took over supportive high compliance with supply cuts from producer group, the Organisation of the Petroleum Exporting Countries (OPEC) ahead of its committee meeting on Wednesday.
Brent crude futures dropped 25 cents or 0.55 per cent to $45.12 per barrel while the United States West Texas Intermediate (WTI) crude futures shed 28 cents or 0.65 per cent at $42.60 per barrel.
There are still ongoing concerns about COVID and as cases hit 22 million on Tuesday, showing that there is still a long way to go. The Americas alone account for 50 per cent of cases as almost 11.5 million people have contracted the disease, and over 400,000 people have died as a result of the pandemic.
The United States, which is the largest consumer of oil, and Brazil are the biggest drivers of the COVID-19 case count in the Americas.
Analysts also noted that the failure of the US Congress to agree on another fiscal relief package to stem economic fallout from the pandemic isn’t helping the market.
These factors underscore good news that helped the market the day before as a technical panel found that compliance with OPEC and its allies, known as OPEC+ oil output cuts in July reached 97 per cent in July.
The coalition eased their cuts in August to 7.7 million barrels per day from 9.7 million barrels per day previously and news of compliance showed that it was a successful motive as prices responded well.
OPEC+ will hold its monthly ministerial panel meeting for August on Wednesday but is largely expected to take a wait-and-see approach and urge some producers who had failed to abide by earlier restrictions agreeing to maintain deeper cuts.
Traders will also be looking toward data on US supplies on Wednesday. The American Petroleum Institute (API), an industry group is expected to release its weekly take on crude inventories first while the Energy Information Administration (EIA), which is the more closely followed weekly data is due later on Wednesday.
There are expectations of another week of falls and if this happens, prices might receive a much-needed boost as the market remains under the watchful eye of rising supplies globally.
