Oil dips on demand fears as OPEC+ considers output increase

Bloomberg WTI heads for weekly decline as virus cases increase

Riyadh and Moscow settled previous disagreements over production cuts that tanked oil prices in order to protect their domestic economies and stabilise global markets.

On Tuesday, a technical committee of The Organization of the Petroleum Exporting Countries and its allies will start a two-day meeting, which could could see the group bringing more oil to the market.

"OPEC sees 2021 demand for its crude rising by 6 million bpd to 29.8 million bpd".

Saudi Arabia, the world's largest oil exporter, and other major oil producing countries are likely to increase their output in August, as coronavirus lockdowns ease and demand begins to rise again. The cut got extended till July owing to unprecedented demand fall due to COVID-19 pandemic.

It was the first report in which OPEC assessed oil markets next year.

The upward revision was a reflection of "slightly better-than-expected oil demand from the OECD region in the second quarter of 2020, which more than offset downward adjustments to non-OECD oil demand during the same quarter", Opec said in its outlook. Lower oil price could not only help lower India's oil import bill, but could also reduce subsidy on LPG and Kerosene while keeping retail auto fuel prices low.

OPEC's monthly report said it expected global oil demand to grow by a record 7 million bpd next year, but that demand will still be weaker than pre-Covid.

At the meeting of OPEC and OPEC+ countries on June 6, it was made a decision to extend the quota until the end of July. In India too, fuel sales that plummeted in April, had reached around 80 per cent of normal levels now.

"We have assumed that Opec+ countries stick to their targets fully for 2020-21 and the increase in levels won't be enough to push the market into surplus, provided demand recovers as strongly as the IEA assumes", he added.

Brent futures (BZ=F) were down 1% to $42.80 per barrel on Monday morning in London, while crude futures (CL=F) fell 1.1% to $40.09 per barrel. All CFDs (stocks, indexes, futures) and Forex prices are not supplied by exchanges however rather by market makers, therefore prices might not be precise and might vary from the real market value, suggesting prices are a sign and not suitable for trading functions.

OPEC's 13 members suffered an 18.4 per cent contraction in their oil export revenue in 2019 on slumping prices, the report showed.

Alberta oil well in canola fieldOil slipped almost 1% on Monday as traders eyed an OPEC technical meeting this week which is expected to recommend an easing in supply cuts that have been propping up crude prices.