The analyst believes cutback compliance will greatly benefit the market: File Image/PixaBay
For a third consecutive session oil prices rose again on Thursday, and this time it was due to the Organization of the Petroleum Exporting Countries (OPEC), which vowed to crack down on cutback non-compliance and will hold an extraordinary meeting in October if oil markets weaken further.
Although the cartel did not recommend any changes to its current rate of cuts, it reportedly pressed Iraq, Nigeria, and the United Arab Emirates to cut more barrels to compensate for overproduction in May to July, while extending the compensation period from September to the end of December.
Also buoyed by U.S. Labor Department data showing that the number of Americans filing new claims for unemployment benefits fell last week, Brent on Thursday settled up $1.08 at $43.30 per barrel, while West Texas Intermediate settled higher by 81 cents at $40.97 per barrel.
Amrita Sen, chief oil analyst, Energy Aspects
We are starting to see better numbers
But despite another session in which the analytical conviction of demand recovery faltering due to rising Covid infections was put into serious question, pundits continued expound a gloomy outlook, case in point: Reuters columnist Clyde Russell, who on Thursday wrote that "the industry knows it's in the worst situation in generations as far as demand goes, and that there is considerable uncertainty over how the situation will unfold in coming months."
He added, "A widely-implemented and successful vaccine would obviously be bullish, but there is no certainty that this will occur, and no definitive timeline even if a vaccine that works is developed."
In fact, the timelines have clearly and repeatedly been reported by media in accordance with announcements from vaccine manufacturers; for example, China's vaccine is expected to be made available next month, and the U.S. is busy preparing for free vaccination dissemination starting year-end 2020 (with front line workers and other people at risk receiving the first doses before the general public).
Still, some experts on Thursday expressed optimism about demand recovery moving forward, chief of which was Amrita Sen, chief oil analyst at Energy Aspects: she told Bloomberg television that OPEC getting tough on compliance would benefit the market greatly, and while she admitted that the recovery would be uneven, "we are starting to see better numbers.....and we will see stocks draw down....demand is getting better."