The Organisation of Petroleum Exporting Countries and allies (OPEC+) is currently cutting output by 7.7 million barrels per day until December to support prices as the coronavirus crisis hammers demand.
OPEC+ is a group of 24 oil-producing nations, made up of the 14 members of the Organisation of Petroleum Exporting Countries, and 10 other non-OPEC members, including Russia.
Oil prices edged up on Thursday, but held near multi-week lows hit overnight after U.S. data showed gasoline demand fell and recovery from the COVID-19 pandemic was lagging.
U.S. West Texas Intermediate crude futures were up nine cents or 0.22 per cent at $41.60 a barrel by 0349 GMT.
Brent crude edged up two cents or 0.05 per cent to $44.45 a barrel.
Both benchmarks fell more than two per cent on Wednesday, with WTI sliding to its lowest close in nearly four weeks and Brent at its weakest since Aug. 21.
U.S. gasoline demand last week fell to 8.78 million barrels per day (BPD) from 9.16 million bpd a week earlier.
Other data, such as U.S. private employers hiring fewer workers than expected for a second straight month in August, also fed fears that economic recovery was lagging.
Analysts warn that the upcoming refinery maintenance and the end of summer driving season would also limit crude demand.
WTI crude has come under pressure “after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil’’, ANZ Research said in a note on Thursday.
“This is compounded by weak refining margins, which are their lowest in nearly a decade for this time of the year.’’
Due to shutdowns ahead of Hurricane Laura, U.S. refinery utilisation rates fell by 5.3 percentage points to 76.7 per cent of total capacity.
“These factors suggest a seasonal drop off in refinery runs and higher oil inventory levels as we advance through September,’’ AxiCorp market strategist, Stephen Innes, said.
Commonwealth Bank (CBA) forecasts Brent will average $46 in the fourth quarter before rising to $55 by the end of 2021.
“There is enough spare oil capacity and enough pressure on demand growth to justify only a gradual increase in oil prices over the next 12 months,’’ CBA commodities analyst, Vivek Dhar, said in a note.
Oil markets, however, drew some support from Iraq’s denial it was seeking exemption from OPEC+ oil cuts during the first quarter of next year.