New York — Oil prices steadied on Thursday, weighed down by an agreement from OPEC+ to ease record supply curbs but buoyed by tightening global inventories as economic activity picks up.
Brent crude fell 4 cents to $43.75 a barrel by 11:10 a.m. EDT (1510 GMT). West Texas Intermediate (WTI) crude dropped 11 cents to $41.09 a barrel.
Both benchmarks rose 2% on Wednesday following a sharp drawdown in U.S. crude inventories.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed on Wednesday to scale back oil production cuts from August.
They will reduce their cuts to 7.7 million barrels per day through December from the 9.7 million bpd cuts in place since May.
“Nobody could really expect OPEC+ to keep the 9.7 million bpd curtailments into August,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez-Masiu. “Boosting output by 2 million bpd is not little, but the demand recovery, even though a little slower than expected, justifies it.”
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said production cuts in August and September would end up amounting to about 8.1 million-8.3 million bpd, more than the headline number.
That is because countries in the grouping which over-produced earlier this year would compensate with extra August-September cuts, he said.
However, despite promising to better comply with OPEC+ production cuts, Angola is set export 41 cargoes of crude oil in September versus 38 in August, a loading programme shows.
“We find unlikely that (laggards) will be able to achieve 100% of compliance,” Rystad’s Rodriguez-Masiu said.
In a sign of the recovery, China’s refinery daily crude oil throughput in June climbed 9% from a year earlier, reaching its highest level on record amid rising gasoline and diesel consumption.
International Energy Agency Executive Director Fatih Birol said on Wednesday that global oil markets are slowly rebalancing, with prices of about $40 per barrel expected in coming months.
Still, Royal Dutch Shell’s chief executive said the global economy will not achieve a v-shaped recovery after the coronavirus epidemic, which will curtail oil and gas demand for years.
“Energy demand, and certainty mobility demand, will be lower even when this crisis is more or less behind us,” CEO Ben van Beurden said.