LONDON: Oil prices slipped on Tuesday after holding steady earlier in the session, as demand fears weighed despite high compliance with production cuts from members of the OPEC+ producer group.
A technical panel found that compliance with OPEC+ oil output cuts in July was between 95% and 97%, according to a draft report seen on Monday by Reuters.
The panel considered a scenario of substantial downside risk to oil demand if the coronavirus pandemic conditions worsen, the report said, calling for “vigilance and close monitoring of the implementation of the compensation for overproduction”.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, eased their cuts in August to 7.7 million barrels per day (bpd) from 9.7 million bpd previously.
OPEC+ will hold a ministerial panel meeting on Wednesday.
“There is a lot of uncertainty in the market and caution is likely priced in today’s afternoon session,” said Bjornar Tonhaugen, Rystad Energy‘s head of oil markets.
Among the uncertainties are renewed travel quarantines in some European countries which impact jet and motor fuel demand, and rising virus infections, he added.
Russian Energy Minister Alexander Novak will join the video meeting despite testing positive for COVID-19, the country’s energy ministry said on Tuesday.
Oil prices have started to pick up in recent months, prompting Australian miner and oil producer BHP to strike an upbeat note in its earnings on Tuesday.
“We believe that the most significant risks to the physical (oil) market have now passed,” the company said, adding that the pace of gains could be modest given potential headwinds from supply returning.