Multiple Favorable Factors Have Sharply Pushed Up International Oil Prices

By Opec suggested extending production phase compensation, the hurricane "Sally" impact on the U.S. gulf coast oil and gas production processing, as well as the influence factors such as the United States commercial crude oil inventories have fallen significantly, international oil prices last week (September 18th September 14 solstice), light crude oil futures whole weeks rose 10.13%, brent crude oil futures all week up 8.34%.

Light crude for October delivery rose 14 cents, or 0.34%, to settle at $41.11 a barrel on the New York Mercantile Exchange. London Brent crude for November delivery fell 15 cents, or 0.35%, to settle at $43.15 a barrel.

After a regular meeting last week, the Joint Ministerial Monitoring Committee of Opec and non-OPEC producers announced that it would recommend to the Opec + ministerial meeting that the mechanism be extended until the end of December, allowing several producers that exceed their quotas to meet their obligations to cut production in full.

Market participants believe Opec and non-OPEC producers will "step in to rescue the market" at a time of low oil prices to boost confidence, driving up international oil prices, according to the analysis.

Meanwhile, hurricane Sally made landfall in the U.S. Gulf of Mexico last week, shutting down more than 20 percent of U.S. offshore oil production and key oil export ports. Bad weather has led to some unpredictability in US oil production, which is positive for oil prices. Oil prices were also supported by DATA from the U.S. Energy Information Administration showing U.S. commercial crude inventories fell 4.4 million barrels in the week ended Sept. 11 to 496 million barrels, significantly better than market expectations (up 1.453 million barrels).

Analysts say the main problem for the oil market is that global demand for crude, which recovered sharply in May and June, has stalled. According to the data, oil consumption is currently about 92 million barrels per day, up from about 100 million barrels before the outbreak. Consumption is widely expected to grow steadily in the third and fourth quarters, but expectations for crude consumption are slowly easing as some countries grapple with the second wave of the epidemic.

Opec's September oil market report forecast a year-on-year drop in global oil demand of 9.46 million barrels a day in 2020, up from the 9.06 million barrels a day forecast in its August report. Opec expects global oil demand to reach 90.23 million barrels a day in 2020, the second consecutive month it has cut its forecast for global oil demand. Opec noted that the economic impact of the pandemic will weaken global energy demand more severely and for longer than previously feared.

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