WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rallied in afternoon trade Thursday, lifting the U.S. crude benchmark to a 2-week high settlement after ministers from the Organization of the Petroleum Exporting Countries and Russia reaffirmed their commitment to a joint 7.7 million barrels per day (bpd) supply-cutting agreement and pressured noncompliant members to make up for overproduced quotas by the end of the year.
"Using tactics to over produce and hide non-compliance have been tried many times in the past, and always end in failure," said Saudi Arabian Energy Minister Prince Abdul-Aziz bin Salman at the beginning of the OPEC+ Joint Ministerial Monitoring Committee on Thursday. "Repeated promises that are not carried through in a timely fashion may have temporary positive impact, but if these are not delivered, they can come back to bite us all."
The Joint Ministerial Monitoring Committee chaired by Saudi Arabia and Russia concluded Thursday's meeting without recommending volume adjustments to the OPEC+ agreement but did agree to a 3-month extension for their laggard members to catch up with their missed targets. The document released by the Joint Technical Committee show the group collectively overproduced 2.375 million bpd from May through August, with 1.64 million bpd coming from OPEC countries and 734,000 bpd from non-OPEC allies. The technical panel added that only six OPEC+ members -- Algeria, Kuwait, Saudi Arabia, Bahrain, Malaysia, and Oman -- did not exceed their quotas in that period. The Joint Technical Committee and the Joint Ministerial Monitoring Committee are scheduled to meet next on Oct. 15 and 19, respectively.
Domestically, demand for refined fuels has struggled in the summer months and is likely to stay muted through the end of the year absent a vaccine against COVID-19 or a stimulus package from the U.S. Congress.
Distillate fuels consumption, a proxy for economic activity, plummeted 904,000 bpd in the most recent week to just 2.809 million bpd and demand for motor gasoline barely budged from the summer's low of 8.390 million bpd at 8.478 million bpd. Historically a high unemployment rate remains a major factor behind lackluster demand for motor gasoline in the world's largest oil consumer. Initial unemployment claims for the week ended Sept. 12 were 860,000, a decrease of 33,000 from the previous week's revised levels. Continued claims, meaning the number of people collecting unemployment benefits for consecutive weeks plummeted 916,000 from the previous week's adjusted levels to 12.925 million. The seasonally adjusted insured unemployment rate decreased 0.7% in the week ended Sept. 5 to 8.6%.
Federal Open Market Committee on Wednesday revised higher projections for the unemployment rate this year to 7.6% from 9.3% in its previous forecast on June 10th.
On the session, October West Texas Intermediate futures gained 81 cents to $40.97 per barrel (bbl) and the international Brent crude futures for November delivery rallied $1.08 to a 2-week high settlement at $43.30 bbl. NYMEX October ULSD futures added 4.35 cents to settle at $1.1598 gallon and the front-month RBOB contract advanced 3.55 cents with settlement at $1.2244 gallon.
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