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Oil rose to above $42 a barrel on Friday, adding to gains in the previous session, after OPEC producers and allies promised to meet supply cuts and signs of demand, hit by the coronavirus crisis, recovering.
Iraq and Kazakhstan, during a meeting of an OPEC+ panel on Thursday, pledged to comply better with oil cuts, sources said. This means curbs by the Organization of Petroleum Exporting Countries and allies, known as OPEC+, could deepen in July.
“There is enthusiasm in the market that oil supply is still under control,” said Paola Rodriguez Masiu, analyst at Rystad Energy. “A positive OPEC+ meeting does that and yesterday’s session helped renew confidence.”
Brent crude was up 75 cents, or 1.8 percent, at $42.26 in early afternoon trade in London after hitting $42.89, its highest since June 8. US West Texas Intermediate (WTI) crude climbed 96 cents, or 2.5 percent, to $39.80.
“The key takeaway is that OPEC+ compliance will improve in the coming months,” said Stephen Brennock of broker PVM. Both contracts rose by about 2 percent on Thursday and are heading for weekly gains of more than 9 percent.
Brent has more than doubled since hitting a 21-year low in April, helped by record OPEC+ supply cuts of 9.7 million barrels per day (bpd), or 10 percent of world demand, and an easing of government lockdowns imposed to control the coronavirus.
Fuel demand in Europe is staging a gradual recovery after the height of the lockdowns in April but remains well below normal, data from several countries shows.
In a further sign of market recovery, Brent on Thursday moved into backwardation, where oil for immediate delivery costs more than supply later, for the first time since March. A premium for oil for immediate delivery usually indicates tightening supply and encourages storage to be drawn down.
US crude stocks hit another record this week, but fuel inventories fell.
Oil prices rose on Wednesday after inventory data showed a big drop in U.S. crude stocks although gains were capped by concerns over fuel demand with mounting global COVID-19 cases.
The Gulf Today
The total global oil production in May amounted to 89.89 million barrels per day (bpd), marking a daily decrease of 10.04 million bpd compared to April, according to figures released by the Organisat
Major oil producers sharply cut back output in May, data showed on Wednesday, as part of a concerted effort to prop up prices that have fallen dramatically in the wake of the global coronavirus pande
Opec forecast that global oil demand will shrink by 9.1 million barrels per day to reach 90.06m bpd in 2020 but anticipates a recovery in demand during the second half of the year.
Opec on Monday forecast lower demand for its crude next year as rivals pump more and said top oil exporter Saudi Arabia, eager to avoid a return of oversupply, had cut production.
In a mon
Times of Oman