Connect with us

Hi, what are you looking for?

General

Oil prices jump as lockdowns ease and supplies tighten

Oil prices climbed by more than $1 a barrel on Monday to their highest in more than a month, supported by continuing output cuts and signs of gradual recovery in fuel demand as more countries ease curbs imposed to stop the coronavirus pandemic spreading.

Brent crude was up $1.19, or 3.7 percent, at $33.69 a barrel by 02:40 GMT, after touching a high since April 13. United States West Texas Intermediate (WTI) crude was up $1.26, or 4.3 percent, at $30.69 a barrel, after rising to its highest since March 16.

“Oil prices may show further upside momentum as the easing in mobility restrictions grows,” said Stephen Innes, chief global market strategist at AxiCorp in a note, referring to curbs that were designed to counter the coronavirus.

Advertisement. Scroll to continue reading.
READ ALSO:  Dangote Group and SAP collaborate to achieve digital transformation in record time

The June WTI contract expires on Tuesday, but there was little sign of WTI repeating the historic plunge below zero seen last month on the eve of the May contract’s expiry amid signs that demand for crude and derived fuels is recovering from its nadir.

Production is also falling as US energy firms cut the number of oil and natural gas rigs operating to an all-time low for a second consecutive week. That partly helped ease concerns about the WTI contract’s delivery point in Cushing, Oklahoma running out of space.

“Given particularly that surprise draw that we saw on inventories last week in the US, it seems unlikely that those concerns about storage facilities will reassert themselves,” Michael McCarthy, chief market strategist at CMC Markets in Sydney said.

READ ALSO:  An Open letter to Front line security personnel: The Uniform is not a PPE.

The Chicago Mercantile Exchange, which hosts trading in WTI futures, brokerages and the United States Oil Fund LP, the largest oil-focused exchange-traded product in the country, have all taken steps that reduce open positions in advance of the WTI contract’s expiry.

Advertisement. Scroll to continue reading.

The positive mood was reinforced as US Federal Reserve Chairman Jerome Powell issued an optimistic outlook for economic recovery later this year.

“Assuming there is not a second wave of the coronavirus, I think you will see the economy recover steadily through the second half of this year,” Powell said Sunday night in broadcast remarks.

Also supporting oil prices are production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a grouping known as OPEC+.

READ ALSO:  Poll Reveals 70% of African Businesses Expect their Revenues to Decrease by More Than 10% Next Month

The world’s top exporter Saudi Arabia announced last week that it would cut an additional one million barrels per day in June, while OPEC+ wants to maintain existing oil cuts beyond June when the group is next due to meet.

Advertisement. Scroll to continue reading.

Kuwait and Saudi Arabia have agreed to halt oil production from the joint al-Khafji field for one month, starting from June 1, Kuwait’s Al Rai newspaper reported on Saturday.

 

Aljazeera

Advertisement. Scroll to continue reading.
Get Your News on Wundef.com

Send us your stories/news and articles to admin@wundef.com or through whatsapp, +233247516850.

Written By

I am a teacher by profession but a blogger by passion. I am always happy when I see people doing well in their businesses so I quickly tell others about it on this blog. Thank you for visiting my blog.

Click to comment

Leave a Reply

Advertisement

Copyright © 2020 Wundef.com