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OPEC: Panic as Oil Prices Drop Over COVID-19 Spike, Bonny Light Gains

There is unease in the global oil circuit as OPEC Joint Ministerial Monitoring Committee (JMMC) warm up for a talk, today and tomorrow where lower levels for future output cuts might be proposed. Reuters reported yesterday that oil prices lowered, extending Friday’s losses as coronavirus infections touched an all-time daily high.

The situation is said to be critical in the US, with huge swells in infections during the weekend. Analysts thought the Organisation of Petroleum Exporting Countries (OPEC) would experience a price war.

Brent Crude edged lower by 43 cents or 1.2% to $42.81 per barrel by 12.57 mid-day although prices had been staying around $42 for some weeks, Reuters reported U.S. benchmark crude, West Texas Intermediate, slid 42 cents or 1.04% to $40.13 a barrel, the report said.

Bonny Light, Nigeria’s premium oil grade, bucked the market downtrend at the last session on Friday to climb 60 cents or 1.41% to $43.28. Another national offering, Qua Iboe added $1.13 or 2.69% to reach $43.10 on Monday.

The news agency quoted Stephen Brennock, analyst at oil broker PVM saying, “pricing pressures are locked in a holding pattern and will remain so until the coronavirus pandemic is brought under control. Until then, there will continue to be a lack of conviction in upside potential.”

World Health Organisation had announced last Sunday an unprecedented daily surge in the pandemic’s cases, coming to over 230,000. Infections in the U.S. ballooned in the weekend that just went by amidst news of an uptick in Florida’s cases, which topped 15,000 in 24 hours, a record for any American state.

“It has been all but a bumpy ride for oil during the last months and the OPEC+ deal on supply has been a pillar for the market. The upcoming OPEC+ meeting this week is now expected, as planned, to make this pillar a bit weaker,” Louise Dickson of Rystad Energy said.

OPEC and its Russia-led allies, collectively known by the tag: “OPEC+” are envisaged to slash supply cuts to 7.7 million barrels per day (bpd) following a rally in global oil demand even though there are signals that the market is still battling glut trouble.

OPEC+ slashed production by an unprecedented 9.7 million bpd for May June and July following an oil crash in April that saw U.S. crude touch its historic low. Libya, however, replaced a bar on every oil exports on Sunday on the ground of renewed blockade by eastern forces two days after it exported its first crude cargo in six months, Reuters said.