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Oil prices ended their downward trajectory that started early September and recorded their biggest weekly gain in three months. The rebound came despite plenty of bearishness in the market that was emphasized by the monthly oil reports from both OPEC and the International Energy Agency (IEA).
However, OPEC’s latest reassurances to its commitment to balance the market spurred confidence and pushed up prices higher.Both international benchmarks rose above the $40 barrier with Brent hitting $43.15 per barrel and WTI crude price rising to $41.11 per barrel.
The IEA monthly oil market report described a fragile market with the the pandemic refusing to loosen its grip on economies.It highlighted such unfavorable fundamentals as well as poor refining margins and a continued increase in OECD global oil stocks to record levels. It also pointed to a growing overhang of unsold barrels that triggered a steady fall in prices into September while reports of floating storage also weighed on market sentiment and decreased the likelihood of any short term recovery in demand.
Even the lower crude oil output from the US Gulf of Mexico due to Hurricane Sally and the higher-than-expected decline in US crude stockpiles were downplayed.Despite half a million barrels per day worth of offshore US production being shut down in the Gulf of Mexico, Hurricane Sally did not impact operations as heavily as Hurricane Laura earlier in the month.
Notwithstanding such factors, oil prices had been tracking down until last week when the market started to gain momentum after Saudi Arabia reaffirmed its commitment to OPEC+ output cuts during the Joint Ministerial Monitoring Committee.