Yesterday, oil markets were mixed after the OPEC+ monitoring committee highlighted the need of sticking to its production cuts as market recovery is being hindered by the advance of the COVID-19 pandemic.
Both Russia and Saudi Arabia insisted on the importance of adhering to the agreement given the current fragility of the market. Regarding the recent decision of expanding the production levels, the excess of production will be offset by compensation cuts by countries that until now have not been successful in terms of their compliance. Based on this, countries like Nigeria and Iraq will have to fully compensate with additional cuts by the end of September.
The Saudi Energy Minister also commented that oil demand will come back to pre-pandemic levels in the fourth quarter.
In July, compliance stood between 95 and 97 percent depending on whether Mexico is included. Iraq's compliance rate stood at 83 percent while Nigeria's was at 65 percent according to data published by S&P Global.
The Energy Information Administration (EIA) reported on Wednesday that United States oil stockpiles fell by 1.6 million-barrel, below the analysts' expectations who foresaw a 2.7 million-barrel decline. Fuel demand contracted 14 percent in the last four weeks.
The West Texas Intermediate (WTI) crude oil futures gained 0.09 percent during the session, closing at the 42.93 level. On the other hand, Brent oil futures dropped 0.20 percent, closing the session at the 45.37 level.
The COVID-19 pandemic continues advancing around the world. At the moment, there are 22,582,785 confirmed cases as well as 791,034 total deaths. The United States leads in the number of infections, with 5,701,162 confirmed cases as well as a death toll of 176,342, followed by Brazil, India, and Russia.
The Federal Reserve released the Federal Open Market Committee minutes, which highlighted the pessimism of the committee members regarding the state of the US economy since they consider that the coronavirus outbreak could present a danger for the US financial system and could continue preventing a robust recovery.
White House economic adviser Larry Kudlow said that the US economy is rebounding strongly, highlighting that fresh federal help will reach unemployed Americans in the next couple weeks.
“I think the economy is on a self-sustaining recovery and it’s a V-shaped recovery,” he told reporters, “We’re seeing terrific numbers,” he added.
Regarding the possibility of a second coronavirus wave, Kudlow said that he hopes that the declines in cases and the number of fatalities will continue, given that Americans are now following social distancing rules, wearing masks, and following hygiene instructions.
As per the promise of President Donald Trump of forgiving the payroll tax cut, Kudlow said that it could be stretched out over a long period of time, over five to eight years.
The US stock markets closed yesterday's session on the negative territory. The Dow Jones Industrial Average went down by 0.31 percent, closing the session at the 27,692.88 level, while the S&P 500 dropped 0.44 percent during the session, closing at the 3,374.85 level. In the same way, the Nasdaq 100 went down 0.71 percent, closing the session at the 11,318.64 level, while the NYSE Composite dropped 0.39 percent during the session, closing at the 12,859.88 level.
The main European indices closed on the positive territory. The DAX advanced 0.74 percent during the session, closing at the 12,977.33 level, while the CAC 40 gained 0.79 percent, closing the session at the 4,977.23 level. In the same way, the IBEX 35 went up by 0.72 percent during the session, closing at the 7,094.30 level, while the Euro Stoxx 50 gained 0.85 percent, closing the session at the 3,317.62 level.