Oil tops $42 as OPEC+ ‘laggards’ promise to step up compliance

US crude stocks hit another record this week, while fuel demand in Europe showed signs of a gradual recovery after the height of the coronavirus lockdown, according to data from several countries. (AFP)
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Updated 20 June 2020

Oil tops $42 as OPEC+ ‘laggards’ promise to step up compliance

  • Analyst hails renewed market confidence after Iraq and Kazakhstan pledge to comply better with production curbs

LONDON: Oil rose to above $42 a barrel on Friday, adding to gains in the previous session, after OPEC producers and allies promised to meet supply cuts and signs of demand, hit by the coronavirus crisis, recovering.

Iraq and Kazakhstan, during a meeting of an OPEC+ panel on Thursday, pledged to comply better with oil cuts, sources said. This means curbs by the Organization of Petroleum Exporting Countries and allies, known as OPEC+, could deepen in July.

“There is enthusiasm in the market that oil supply is still under control,” said Paola Rodriguez Masiu, analyst at Rystad Energy. “A positive OPEC+ meeting does that and yesterday’s session helped renew confidence.”

Brent crude was up 75 cents, or 1.8 percent, at $42.26 in early afternoon trade in London after hitting $42.89, its highest since June 8. US West Texas Intermediate (WTI) crude climbed 96 cents, or 2.5 percent, to $39.80.

“The key takeaway is that OPEC+ compliance will improve in the coming months,” said Stephen Brennock of broker PVM.

Both contracts rose by about 2 percent on Thursday and are heading for weekly gains of more than 9 percent.

Brent has more than doubled since hitting a 21-year low in April, helped by record OPEC+ supply cuts of 9.7 million barrels per day (bpd), or 10 percent of world demand, and an easing of government lockdowns imposed to control the coronavirus.

Fuel demand in Europe is staging a gradual recovery after the height of the lockdowns in April but remains well below normal, data from several countries shows.

In a further sign of market recovery, Brent on Thursday moved into backwardation, where oil for immediate delivery costs more than supply later, for the first time since March. A premium for oil for immediate delivery usually indicates tightening supply and encourages storage to be drawn down.

US crude stocks hit another record this week, but fuel inventories fell.


Egypt inaugurates $3.4M hyrdocracking complex to produce petroleum products

Updated 27 September 2020

Egypt inaugurates $3.4M hyrdocracking complex to produce petroleum products

CAIRO: A new hydrocracking complex worth $3.4 million was inaugurated on Sunday by the Egyptian president in a ceremony north of Cairo.

The complex will produce 4.7 million tons of high-value petroleum products as part of Egypt’s ambitious program to enhance its refining industry, a local report said. 

It was established in cooperation with the private sector to produce high-octane gasoline and diesel. It converts low-value diesel into high-quality petroleum products, which include hydrocracking units for diesel, charcoal, vacuum distillation, sulphur treatment and naphtha repair, according to a report by Egypt Today news website. 

Work at the site, located in Musturud of Qalyubia governorate, began in 2011 but was halted due to the political turmoil that broke out that year, the Egyptian president said. 

President Abdel Fatah El-Sisi asked Egyptians to realize “the size of benefits from a complex like this for Egypt in the field of petroleum,” in statements quoted by Youm 7 newspaper.