Oil prices maintained their upward drift Thursday morning, buoyed by a reduction in U.S. crude stock and production cuts by big oil-producing nations, which helped to minimise glut even though fears over worldwide economic consequences of the coronavirus pandemic limited gains.
July’s Brent crude futures went 33 cents or 0.9% higher to $36.08 a barrel as of 04:44 West African Time.
U.S. West Texas Intermediate (WTI) appreciated for the sixth session in a row, adding up 20 cents or 0.6% to reach $33.69 per barrel.
Nigeria’s premium oil grade, Bonny Light, jumped by $1.14 or 3.46% to $34.09 at the Wednesday session.
However, the nation’s other grades – Qua Iboe and Brass River – saw little reversal that same day, each sliding by 46 cents or 1.31% to $34.74 per barrel.
Energy Information Agency (EIA) data demonstrated that U.S. crude storage had been depleted by 5 million barrels last week contrary to a Reuters-conducted poll that envisaged a 1.2 million increase while storage at Cushing, Oklahoma, delivery hub tumbled by 5.6 million.
Capital Economics, in a note released on Wednesday, said “while signs that WTI storage pressures are abating is positive for prices, the latest report shows that the fall in stocks owes more to supply factors than growing product demand.”
Recently, prices have been helped by shipping data indicating that the Organisation for Petroleum Exporting Countries (OPEC) and its allies known by the group tag, OPEC+, are honouring their vow to cut daily output by 9.7 million barrels.
“With supply being managed through the compliance among OPEC+ and demand recovering in North Asia, particularly in China, things are moving in the right direction in terms of supporting oil prices,” said Victor Shum, Vice President, Energy Consulting at IHS Markit.
“If there is no surprise in a second or third wave in the virus attack and key members of OPEC+, Saudi Arabia in particular, are doing more cuts, we expect a gradual recovery will continue in the second half,” he went further to say.
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