The two international oil benchmarks ended the week on contrasting notes as Brent edged lower after two weeks of gains to $44.35 per barrel. Meanwhile, WTI advanced to $42.34 per barrel.
Still, the broader narrative of downward pressure on prices remained the same and oil remained steadfastly stuck in its current trading range.
The 21st OPEC Joint Ministerial Monitoring Committee (JMMC) meeting ended positively and emphasized the beneficial contribution of OPEC+ in rebalancing the global oil market.
Tellingly, prices did not rise in response the latest demonstration of the group’s continued commitment to output cuts, which perhaps reflects wider concerns about the pace of recovery from the coronavirus pandemic and the danger of a second wave. US crude oil exports to China will hit a record in September.
It coincides with lower refining runs in the US as the market is defined by weakness not only in the shale sector but also across the medium sour crude grades that are produced in the US Gulf coast.
US refining utilization was 80.9 percent, which is the weakest seasonally adjusted figure in decades, after refiners shut down crude distillation units following the collapse in demand.
Another sign of the weakness in demand is the “contango” market structure which signals concerns about oversupply and describes a situation where the price of oil for future delivery is lower than for the current month.
This encourages storing barrels rather than selling them until prices improve.
This could yet lead to a repeat of the “super-contango” scenario witnessed in April when prices plummeted to historical lows.
Persistent weak demand continues to force refineries to shut down, with margins likely to remain depressed for some time.