Oil Loses Ground Ahead Of The Weekend

Oil Video 14.08.20.

OPEC+ Will Not Discuss Any Changes To The Current Deal

In an interview to a Russian news agency TASS, The Russian Minister of Energy Alexander Novak stated that the Joint Ministerial Monitoring Commitee (JMMC) would not discuss changes to the current OPEC+ production cut deal at the next meeting.

He also stated that JMMC meeting may take place on August 19 instead of August 18.

At this point, OPEC+ has no reason to change its production cut deal. OPEC+ countries have recently increased their production levels and now have to wait to see how the market reacts to the new reality.

So far, the reaction has been good. While WTI oil prices are stuck near the $42 level while Brent oil fails to gain upside momentum above the $45 level, the increase in production levels did not lead to any notable downside moves.

In addition, inventories have finally started to decrease which is bullish for oil in the longer term.

At the same time, the recent downside revisions of oil demand forecasts by both OPEC and IEA mean that any additional increase in production levels is off the table for the upcoming months.

Weaker-Than-Expected China’s Economic Data Puts Additional Pressure On Oil

Today, China has reported that its Retail Sales declined by 1.1% in July compared to analyst consensus which called for growth of 0.1%. Industrial Production was also weaker than expected, growing by 4.8% compared to analyst consensus of 5.1%.

This is a worrisome development for all commodity markets as China’s economic data has been a bright spot during the current crisis. China is the world’s second biggest oil consumer so oil traders watch Chinese data closely.

At this point, it is too early to tell whether Chinese economy is indeed slowing down. For now, the main problem for oil is the challenging situation in the travel sector which is hurt by the world’s failure to contain coronavirus.

If the market sees that China’s rebound is facing problems, the whole commodity sector will experience more pressure.

For a look at all of today’s economic events, check out our economic calendar.