Oil rose above $34/bbl, following a prediction from Russia that the market may rebalance. As early as next month thanks to historic output cuts from global producers.
Russia, a key member of the OPEC+ alliance that has pledged to trim supply by almost 10 million barrels each day , expects the market to balance in June or July. Energy Minister Alexander Novak said global output curbs have thus far exceeded those agreed by the coalition. Futures in ny were 2.5% higher from Friday’s close after there was no settlement Monday thanks to a vacation .
Oil has surged quite 80% this month as demand returned following the easing of lockdown restrictions in some countries, while output cuts have began to chip away at at the oversupply. The International Energy Agency sees oil consumption eventually rebounding past pre-virus levels, whilst some argue that the coronavirus outbreak will fundamentally shift patterns of consumption.
“Global supply remains heading lower while demand is rising,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “This all lays the bottom for higher prices down the road.”
West Texas Intermediate crude
West Texas Intermediate crude for July delivery rose $0.84 from Friday to $34.09 a barrel as of 10:26 a.m. London time
Brent for July settlement added 1.8% to $36.17 a barrel
Nigeria, which has been cursed with many barrels of unsold crude in recent weeks. Lifted the asking price for its supplies in June from record lows. Though smaller than in previous months. The discounts remain at unprecedentedly steep levels by historical standards, a reminder of the pockets of oversupply within the market.
Around the world, producers have slashed global production by 14 million to fifteen million barrels each day thus far , Russia’s Novak said on Monday. the state sees the present global surplus at 7 million to 12 million barrels each day , consistent with a report from RIA Novosti.
Though producers are slashing output and demand is recovering, there are ongoing signs of the damage the virus has wrought to the industry. Both refineries within the Philippines have now been shut as a results of weak fuel demand, consistent with their operators.