Oil prices rally from 3-week lows although headwinds cloud outlook, Bonny Light adds 61 cents

Brent is on course for the fourth straight month of gains and WTI is approaching its third month also as the contracts have sprung back from the depths plumbed in April when a great part of the world was under lockdown.

The prospect of an oil demand pullback increasingly noticeable as a second round of infections manifests across the globe.

“Despite the resilient and range-bound nature of oil pricing over recent weeks, plateauing global demand and increasing OPEC+ output raises the question of whether the market can absorb additional barrels,” RBC Capital Markets said in a note.

OPEC+, a cartel of the Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, plan between them to lift output from Saturday, enlarging world supply by 1.5 million barrels.

Worldwide economic outlook has gone bleak as an uptick in COVID-19 cases increases the likelihood of re-imposed lockdowns and makes rebound uncertain, according to Reuters polls of more than 500 economists around the world.

That was underscored by a report on Thursday that U.S. gross domestic product crumbled at a 32.9% annualised rate, the steepest fall in output since records started in 1947.