The Oil Rally Has Stalled Once Again | OilPrice.com

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Oil prices hit four-month highs this week, but bearish sentiment quickly snapped back into place and halted the rally.

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Friday, July 3rd, 2020

Crude oil hit four-month highs on Thursday, aided by a tightening market and a better-than-expected U.S. jobs report. The caveat is that the jobs survey took place before the latest Covid-19 wave and the associated closures. Analysts still expect oil to face resistance to any further gains. “Gasoline has carried the load on recovery and demand, and it’s not clear whether that could continue into August and September,” Andrew Lebow, senior partner at Commodity Research Group, told Bloomberg. Oil prices retreated during midday trading on Friday.

OPEC+ scheduled to ease production cuts. OPEC+ is scheduled to ease production cuts beginning in August, and sources told Reuters that the group will likely refrain from an extension. Saudi Arabia also reportedly put pressure on Nigeria to increase its compliance. On Thursday, Russian energy minister Alexander Novak reiterated that position. “At present, there are no decisions to prepare any changes…Next, under the current agreements we should have a partial restoration of the volume of reductions starting August 1,” he said, according to TASS.

Russia’s oil exports to Europe near two-decade low. Russia is set to cut oil exports to Europe to just 900,000 bpd in July, the lowest level since 1999, as supplies from elsewhere continue to gain market share. U.S. oil, in particular, has gained a foothold.

Libya restarts eastern oil field. Libya brought the Mesla field back online, adding a small amount of idled production.

Saudi Arabia and Kuwait restart Neutral Zone. Saudi Arabia and Kuwait have restarted production at the Al-Khafji oil field in the neutral zone between the two countries. Related: Saudi Arabia Eyes Total Dominance In Oil And Gas

Shell eyes energy transition. Royal Dutch Shell (NYSE: RDS.A) announced a $15 to $22 billion write down and lowered both its long-term oil and natural gas price deck. Analysts widely say that the writing is on the wall in terms of demand. “Oil and gas demand might well continue to grow from here, and many companies are still chasing a share of that growth,” Luke Parker of Wood Mackenzie wrote. “But make no mistake, the likes of Shell and BP are already positioning for the twilight years.”

India’s fuel demand rebounds. Coronavirus continues to spread in India, but fuel demand rose in June from a month earlier, although it was 12 percent lower than in June 2019.

Global oil demand and CO2 emissions peaked in 2019. A new report from DNV predicts that oil demand and global…