OPEC countries agree to increase oil production

Oil prices soaring yesterday reacted to the data of the EIA and the decision of OPEC countries to increase oil production.

At a meeting of the OPEC+ 15 July it was decided to gradually restore oil production, which in April were a record reduced because of the pandemic, Covid-19.

According to the Minister of energy of Saudi Arabia Abdul-Aziz bin Salman, to December 2020, OPEC+ will reduce oil production at 7.7 million barrels/day, instead of 9.6 million barrels per day as agreed earlier. And the countries that exceeded the limit in previous months, will pay compensation.

According to OPEC+, in August and September the reduction of production will be reduced to 8.54 million barrels/day after payments from Iran, Russia, Kazakhstan, Angola and Nigeria.

ahead of the meeting, some OPEC countries+ submitted a request to increase production following the recovery of demand for petroleum products.

September futures on Brent crude rose 2% to 43.6 $/barrel, while August WTI crude oil – by 1.8% to 41 $/bbl.

the Decision of OPEC+ prevents a possible decrease in oil prices as a result of a slow recovery in demand amid increasing concerns about another tightening quarantine restrictions through the rapid spread Covid-19 in USA, Brazil and India.

the increase in oil prices supported markets vegetable oils and keeps the price of corn from falling on the background of increasing forecasts for corn production in the US compared with last year.

Yesterday's EIA report confirmed a gradual recovery in the production of ethanol, which this week rose by 17 thousand barrels/day to 931 thousand barrels/day, which exceeds expectations, and meets weekly consumption of maize 2.4 million tons.

Reduction of inventory of ethanol and gasoline in the U.S. increases the profitability of production. But soon the trend may change, because some States to prevent the spread of coronavirus tightening quarantine restrictions.