OPEC Warns Second 'Strong Wave' Of Coronavirus Will Lead To Drop In Oil Demand

The Organization of the Petroleum Exporting Countries held a Joint Ministerial Monitoring Committee meeting on Wednesday to discuss supply cuts.

OPEC+ sources say the committee is aligned to ease oil production cuts. So far, the Saudi and Russian energy ministers both support the tapering of cuts.

What Happened: The meeting with oil producers on Wednesday was led by Saudi Energy Minister Prince Abdulaziz bin Salman and his Russian counterpart Alexander Novak to discuss whether to extend the record production cuts of 9.6 million barrels per day or taper to 7.7 million bpd starting in August.

The members will restore oil supplies in August.

The shares of several energy companies were trading higher Wednesday after the EIA reported a larger-than-expected draw in U.S. crude oil inventories.

The Impact Of A Second Coronavirus Wave On Demand: The coronavirus pandemic has crippled economies and means the world will continue to face further uncertainty.

The cartel enforced record production cuts back in April as the demand for crude evaporated. The production cuts agreed to in April were extended to July.

OPEC+ research showed a second "strong wave" of coronavirus could lead to 2020 oil demand dropping by 11 million bpd.

Oil Prices: Although the demand for crude has jumped in recent weeks, the rising number of coronavirus cases in the U.S. could portend the reimposition of shutdowns on major economies. 

The prices of Brent crude have been around $40 to $45 per barrel for the last five weeks and was up 1.24% at $43.43 at the time of publication Wednesday. 

The next OPEC+ JMMC meeting will be held Aug. 18. 

Related Links:

USO Tanks After Oil ETF's Temporary Trading Halt

Oil Prices Rebound, Analyst Says Market Faces Tsunami Of Surplus