0219 GMT: Crude oil futures were higher in mid-morning trade in Asia July 15 as an improved global demand outlook and OPEC+ compliance data lifted sentiment ahead of a meeting at which the alliance is expected to taper production cuts.
At 10:19 am Singapore time (0219 GMT), ICE Brent September crude futures were up 26 cents/b (0.61%) from the July 14 settle at $43.16/b, while the NYMEX August light sweet crude contract was 23 cents/b (0.57%) higher at $40.52/b.
OPEC in a monthly report July 14 raised its forecast for 2020 oil demand by 130, 000 b/d to 90.7 million b/d from its June forecast due to slightly better-than-expected oil demand from the OECD in the second quarter, and said demand in 2021 was expected to rise further to 97.7 million b/d.
Compliance with the OPEC+ production cut agreement was 112% for OPEC members in June, higher than the 99% recorded for participating non-OPEC nations, and combined resulted in 107% overall compliance, according to analyst reports. This comes as Iraq and Nigeria promise to compensate for overproduction in previous months and improve their compliance with supply cuts to 100%, according to media reports.
"The guarantee of the principle of compensation was music to the market ears, as was OPEC compliance, which continues to demonstrate unwavering unity within the group," AxiCorp chief global markets analyst Stephen Innes said in a note July 15.
The OPEC+ Joint Ministerial Monitoring Committee meeting set for later July 15 will decide whether to extend the current 9.7 million b/d production cuts or ease to earlier agreed 7.7 million b/d cuts in August. Sources familiar with the negotiations say an extension is unlikely amid indications that oil prices and global demand was recovering.
"Despite heavy expectations that the cartel is set to ease its current output cuts beginning next month, prices are holding steady on news that the oil bloc is seeking an additional 842,000 b/d of supply cuts in August and September from the errant members of Iraq, Nigeria and Kazakhstan. In theory, this could ease almost half the additional oil supply coming back on stream," OCBC analysts said in a note July 15.
Meanwhile, China recorded all-time high crude oil imports of 13 million b/d in June - 14.6% higher than the previous record in May - and the first time imports have surpassed 12 million b/d, latest preliminary data from China's General Administration of Customs showed July 14.
"Oil imports reached a record high as refiners ramped up production and lower prices attracted opportunistic buying. We expect imports to stay buoyant given higher oil import quotas for independent refiners and plans for collective purchases of oil by refining giants," ANZ analysts said in a note July 15.
In addition to the OPEC+ decision, market participants will be looking for fresh cues from the US Energy Information Administration's weekly US crude stocks report that is also due for release later July 15.
