By Grant Smith and Sharon Cho

Sep 18, 2020

(Bloomberg) Oil fell, paring its biggest weekly gain since June, as Libyan military commander Khalifa Haftar said he will allow crude production and exports to resume.Futures slid 0.7% in New York following the announcement from Haftar, who controls most of eastern Libya and has halted operations and shipments from his territory as part of a campaign against the internationally recognized Tripoli government. The OPEC member is pumping just 80,000 barrels a day, but produced 1.2 million a day last year.Nonetheless, prices remain 9% higher this week, buoyed by a show of determination to defend the market on Thursday from Saudi Arabia, the most influential nation in the Organization of Petroleum Exporing Countries. The Saudis hinted they’re prepared for new production cuts, and lambasted OPEC+ members that have cheated on production quotas.

U.S. crude on track for strongest weekly gain since June

“All in all, the strong reiteration of OPEC+’s commitment with its planned supply cuts is welcome news to the bulls in the market,” said Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA.

Prices
West Texas Intermediate for October delivery fell 26 cents to $40.71 a barrel on the New York Mercantile Exchange as of 8:00 a.m. local time, after climbing 2% on Thursday Brent for November settlement slipped 30 cents to $43.00 on the ICE Futures Europe exchange, after rising 2.6% in the previous session

Oil has clawed its way back above $40 a barrel this week, buoyed by a weaker dollar and a surprise decline in U.S. crude inventories.

Yet the market is still contending with an uneven recovery in consumption amid a second wave of the coronavirus, and bearish calls on the outlook from industry heavyweights such as BP Plc and Trafigura Group to the International Energy Agency.

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Saudi Energy Minister Prince Abdulaziz bin Salman opened Thursday’s meeting with a forceful condemnation of members that try and get away with pumping too much crude.

This week, the IEA said the United Arab Emirates almost entirely disregarded its commitment to quotas last month, while tanker tracking data show Iraq is exporting more crude so far in September than it shipped in August, a sign it’s falling behind in its compliance efforts.

Other oil-market news:
Global oil inventories should draw down this month and the market is likely to see a deficit of 3 million barrels a day in the fourth quarter, according to Goldman Sachs Group Inc. Oil demand globally is seen recovering in full in the second quarter of next year, Russian Energy Minister Alexander Novak told state-run Rossiya 24 Television after the OPEC+ meeting. Stockpiles of light distillates, which include gasoline, surged to a record at the oil-trading hub of Singapore as countries across the region cut imports amid a stalling demand recovery. South Korea’s SK Innovation Co. plans to reduce operating rates of crude distillation units at its Ulsan refining complex to about 70% next month, according to people with knowledge of the matter.

Other oil-market news:

Global oil inventories should draw down this month and the market is likely to see a deficit of 3 million barrels a day in the fourth quarter, according to Goldman Sachs Group Inc.
Oil demand globally is seen recovering in full in the second quarter of next year, Russian Energy Minister Alexander Novak told state-run Rossiya 24 Television after the OPEC+ meeting.
Stockpiles of light distillates, which include gasoline, surged to a record at the oil-trading hub of Singapore as countries across the region cut imports amid a stalling demand recovery.
South Korea’s SK Innovation Co. plans to reduce operating rates of crude distillation units at its Ulsan refining complex to about 70% next month, according to people with knowledge of the matter.