WASHINGTON (DTN) -- Nearest-delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled the Wednesday session shallowly mixed. Concerns over lackluster demand growth in the United States countered pledges from the Organization of the Petroleum Exporting Countries and allied producers to comply with the current 7.7-million-barrel-per-day (bpd) supply cut agreement.
NYMEX September West Texas Intermediate crude futures finished little changed for a third straight session, settling at $42.93 per barrel (bbl) while spot-month international benchmark Brent crude settled marginally lower at $45.37 per bbl. ULSD September futures dropped back 0.94 cent to $1.2510 per gallon, and the front-month RBOB September contract finished 0.75 cent higher at $1.2905 per gallon.
"We should endeavor to put this temporary compensation regime behind us, by clearing all the past over-production by end of September," said Saudi Energy Minister Prince Abdulaziz bin Salman during the OPEC+ Joint Ministerial Monitoring Committee Meeting on Wednesday. Although overall compliance with the deal was about 95%-97% in July, there are still some 2.3 million bpd in compensation cuts required from the laggard members, Nigeria, Iraq and Kazakhstan. The draft statement said all compensation plans shall be submitted before the end of August.
"Not only does this accelerate the rebalancing of global oil markets, it also sends out a serious message that there is a new spirit of determination and discipline in our group," he continued.
The group projects global oil demand to recover 97% of its pre-pandemic level by the fourth quarter after making significant improvement over the past three months. Many analysts, however, see this forecast as overly optimistic. Global air travel and traffic volumes in several major economies continue to lag far behind those of last year, while the recent flare-ups in coronavirus virus further undermined the nascent recovery. U.S. Energy Information Administration data released Wednesday revealed gasoline demand in the U.S. declined 253,000 bpd from the previous week to 8.630 million bpd, reversing most of the prior week's surge. Consumption of distillate fuels fell for the first time in four weeks, sliding 609,000 bpd or 15.8% to 3.253 million bpd. Those figures are worrying signs for demand outlook as economic recovery stalled and millions remain out of work.
The minutes to the Federal Reserve July meeting revealed Wednesday that participants see that the U.S. economy and jobs picked up somewhat in the past few months, but the pace of the recovery depends on the highly uncertain path of the virus.
Liubov Georges can be reached at liubov.georges@dtn
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