WASHINGTON (DTN) -- Nearby month delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange traded little changed at midmorning Monday as market participants await the ministerial meeting among Organization of the Petroleum Exporting Countries and Russia-led allies where producers are expected to review adherence with supply agreement and recovery in global oil demand.
Investors are watching this week's meeting of OPEC+ joint ministerial monitoring committee scheduled for Wednesday (Aug. 19). The meeting will largely focus on compliance with production quotas, with pressure building on laggard members Iraq and Nigeria to finally reach their targets. Sources told Reuters Monday that compliance with OPEC+ oil output cuts are seen around 97% in July. That being said, market participants expect few surprises from this week's meeting. Russian Energy Minister Alexander Novak said there have been no additional proposals to change the deal. In August, OPEC+ eased its agreed cuts to 7.7 million barrels per day (bpd) from 9.7 million bpd previously.
The outlook for global oil demand, however, has deteriorated in recent months, as the pandemic curbs international travel and new virus outbreaks weigh on mobility in major economies.
The International Energy Agency's latest monthly report indicates global demand will likely remain under pressure from ongoing uncertainty caused by COVID-19, weakness in aviation and stalled mobility across several regions. The agency revised lower its demand estimates for 2020 and 2021, forecasting little to no improvement in jet fuel and kerosene demand. The Paris-based agency deepened this year's demand contraction to 8.1 million bpd, while OPEC sees a steeper drop of 9.1 million bpd, which is more than 9% below the last year's figure.
Further weighing on the sentiment, the United States and China postponed a meeting this past weekend to discuss the progress of their phase-one trade agreement. Recent economic data has shown the Chinese economic recovery is proceeding less strongly than expected. Figures suggested industrial output slipped below expectations and retail sales in July saw a surprise fall.
Separately, the number of active oil rigs in the U.S. as of Friday (1/14) declined for the 21st time in 22 weeks, down four to a fresh, better-than-15-year low at 172, according to data published by Baker Hughes. The oil rig count has fallen 598 from a year ago with 479 of those rigs pulled from the service in the second quarter alone.
Near 9:30 a.m. EDT, West Texas Intermediate crude oil for September delivery traded little changed at $42.01 bbl and the spot month international Brent crude contract edged slightly lower to $44.73 bbl. NYMEX ULSD September futures were marginally lower at $1.2312 gallon and front-month RBOB futures rose about a penny to $1.2582 gallon.
Liubov Georges can be reached at email@example.com
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