TOKYO: Oil prices edged lower on Tuesday, mostly holding onto overnight gains after OPEC+ said the producer grouping is almost fully complying with output cuts to support prices amid a drop in demand for fuels due to the coronavirus pandemic.
Brent crude was down 6 cents, or 0.1%, at $45.31 a barrel by 0027 GMT, after gaining 1.3% on Monday.
U.S. crude was down 8 cents, or 0.2%, at $42.81 a barrel, having risen 2.1% in the previous session.
Compliance with OPEC+ oil output cuts was seen at around 97% in July, two OPEC+ sources told Reuters. The oil producers curbed output by record levels to reduce worldwide inventories, as demand collapsed from the pandemic.
Still, the Organization of the Petroleum Exporting Countries (OPEC) and allies known as OPEC+ in August reduced their agreed cuts to 7.7 million barrels per day (bpd) from 9.7 million bpd previously.
“The producer club cannot afford prices to slump too far, as its members’ economies rely heavily on the revenue generated by petroleum exports,” Eurasia Group said in a note.
But it noted that “U.S. producers are also taking advantage of supply cuts led by OPEC and Russia.”
The U.S. Energy Information Administration last week reduced its global oil demand forecast, suggesting a smaller than previously expected reduction in global inventories.