Oil prices met sour-sweet fate Tuesday morning as profit-taking caused Brent to retreat after early gain, while the West Texas Intermediate (WTI) sustained its rebound with hints of output cuts among producers and improved demand.
Brent crude was down by 19 cents or 0.6%, coming to $34.62 per barrel as of 04:51 West African Time, having nudged its peak since 9th April.
On the contrary, U.S. WTI jumped by 11 cents or 0.4% to $31.93 a barrel, shedding a portion of the gain recorded earlier. At the initial part of the session, it had climbed as high as $33.44, kissing its highest point since 16th March.
Nigeria’s banner oil grade, Bonny Light, had on Monday risen by $4.11 or 13.77% to $33.95 per barrel, raising hopes of drawing levels soon with benchmark Brent.
WTI’s June contract is due for expiration on Tuesday. However, there was a little possibility of a replay of the record dive below zero as experienced in April before May contract expired amid indications that demand for oil and its derivatives is rallying from last month’s slump.
Michael McCarthy, CMC Markets’ chief market strategist said “I would not be surprised to see a short-term pull back as strength that we’ve seen in crude market the last week was quite extraordinary.”
Oil trade had been stimulated by the optimism that the deal between the Organisation for Petroleum Exporting Countries (OPEC) and its Russia-led allies to cut production were being implemented.
“Investors’ sentiment has improved as OPEC+ are apparently slashing output as they promised for this month, with more voluntary cuts expected in June.
“At the same time, there is growing optimism that the easing of global (coronavirus) lockdowns will help boost economic activity and fuel demand,” said Hiroyuki Kikukawa, researcher at Nissan securities.