What’s happening: Crude oil closed lower on Friday but ended the week on a higher note due to a decline in weekly US supplies.
What happened: Crude prices remained under pressure last week, with major oil organisations issuing downbeat projections for global oil demand.
Despite this, the EIA’s (Energy Information Administration) report showing a higher-than-expected decline in crude supplies supported oil prices last week. The upcoming meeting of the OPEC+ committee will be in the spotlight this week.
Why it matters: In a monthly report released on Thursday, the IEA projected global oil demand to shrink by 8.1 million bpd (barrels per day) to 91.9 million bpd in 2020.
Earlier in the week, a monthly OPEC (Organisation of the Petroleum Exporting Countries) report also estimated a decline of 9.1 million bpd in 2020 in global oil demand to 90.6 million bpd.
Investors shrugged off these downbeat projections and focused on the EIA’s weekly report showing a decline of 300,000 barrels per day in total oil production in the US, with crude inventories contracting by 4.5 million barrels, falling for the third consecutive week.
In another positive sign for the oil market, the Baker Hughes report issued on Friday said that the number of active US rigs drilling for oil had dropped by 4 to 172. This, too, had declined for the third successive week.
WTI (West Texas Intermediate) crude for September delivery fell 0.5% to close at $42.01 per barrel on the NYMEX (New York Mercantile Exchange). The global benchmark Brent crude for October declined 0.4% to $44.80 a barrel on the ICE Futures Europe.
For the week, US crude gained 1.9%, while Brent recorded a gain of 0.9%.
In other energy trading, September natural gas jumped 8% to $2.356 per million British thermal units in the previous session, adding 5.3% last week.
What to watch: Markets will keep a close eye on the meeting of the Joint Technical Committee of the OPEC, scheduled for Monday. The JMMC (Joint OPEC-non-OPEC Ministerial Monitoring Committee) is also due to hold a meeting on Tuesday to monitor compliance with output cuts among the OPEC+ countries.
Crude oil is expected to continue its positive momentum today, with crude oil futures trading higher by 0.8% to reach $42.33 during the Asian session.