Economy

Oil prices climb as U.S. stock drawdown eases supply glut fears

Published

on

Oil prices advanced on Thursday as a drawdown of the U.S. crude inventories and output cuts by major producers helped ease concerns about a supply glut, though lingering fears over the global economic fallout from the COVID-19 pandemic capped gains.

Brent crude futures for July delivery were trading up 33 cents, or 0.9 per cent, at $36.08 per barrel at 0344 GMT, rising for a second day.

The U.S. West Texas Intermediate (WTI) crude futures for July were up 20 cents, or 0.6 per cent, at $33.69 a barrel, extending its gains into a sixth straight session.

The U.S. crude inventories fell by five million barrels last week, against expectations in a Reuters poll for a 1.2 million-barrel rise, Energy Information Administration (EIA) data showed, while stocks at the Cushing, Oklahoma, delivery hub dropped by 5.6 million barrels.

“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,’’ Capital Economics said in a note issued on Wednesday.

Prices have been boosted lately by shipping data showing the Organisation of the Petroleum Exporting Countries, Russia and other allies, a group known as OPEC+, are complying with their pledge to cut 9.7 million barrels per day (bpd).

OPEC itself is encouraged by the rally in prices and strong adherence to output cut pledges, its secretary general said, although sources say the group has not ruled out further steps to support the market.

“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 of 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 said.

In fact, physical crude markets are signalling a rapid shift from an enormous over-supply at the height of the coronavirus lockdowns in April towards an expected under-supply in the second half of the year.

Still, concerns about the lasting economic impact from the pandemic, especially in the U.S., the world’s biggest oil consumer, have applied downward pressure on prices.

Federal Reserve policymakers repeated a vow to take all steps necessary to shore up the U.S. economy, minutes from the U.S. central bank’s April 28-29 policy meeting released on Wednesday showed.

AIB

Edited By: Abdulfatah Babatunde (NAN)

Babatunde Abdulfatah

Babatunde Abdulfatah: is a graduate and a professionally trained journalist, with experience in national news reporting/editing and verification at the News Agency of Nigeria. NNN is a media subscriber of the News Agency of Nigeria. NNN is a Nigerian online news portal that publishes breaking news in Nigeria, and across the world. Our journalists are honest, fair, accurate, thorough and courageous in gathering, reporting and interpreting news in the best interest of the public, because truth is the cornerstone of journalism and they strive diligently to ascertain the truth in every news report. Contact: editor[at]nnn.ng. Disclaimer.

Latest News

Coronavirus – Africa: COVID-19 Update (30 November 2020) Coronavirus – Nigeria: COVID-19 case update (30 November 2020) Coronavirus – Zimbabwe: COVID-19 Update (30 November 2020) Signing of Line of Financing Agreement (under the Covid-19 Line of Financing (LOF) Support Facility) between the Islamic Corporation for the Development of the Private Sector (ICD) and Coris Bank International – Burkina Faso (CBI – Burkina Faso) African Union Commission (AUC) organizes Executive Leadership Training course on Public Policy, Management & Migration Governance AstraZeneca’s Phakamisa Programme marks 10 years since launch with programme expansion African Businesses and Officials Demand Justice Against Disgraced Spanish Police Commissioner José Villarejo and Diario Rombe Founder Delfin Mocache Massoko FIFA Secretary General Discusses world football disruption, impact of FIFA COVID-19 relief plan and wokeness at World Football Summit Live IX Social App Makes Trading Accessible to Everyone African Development Bank Invests in Pioneering SPARK+ Africa Fund to Deliver Clean Cooking Solutions Commonwealth to observe Ghanaian elections Coronavirus – Sierra Leone: COVID-19 update (29 November 2020) Southern Madagascar faces drought-driven hunger, threatening millions Coronavirus – South Africa: COVID-19 update for South Africa (29 November 2020) Coronavirus – Rwanda: COVID-19 update (29 November 2020) Coronavirus – South Africa: COVID-19 statistics in South Africa (29 November 2020) Coronavirus – Malawi: COVID-19 Daily Information Update (29th November 2020) Tanzania: Burundian Refugees ‘Disappeared,’ Tortured South Sudan: UN arms embargo must be maintained after surge in violence against civilians in 2020 UN condemns ‘brutal and callous’ attack on civilians in north-east Nigeria 25m Nigerians to own 5m solar systems at N4,000 monthly – Presidency AIDS: Treatment of 1.5m PLHIV key to sustaining control of HIV annually – NACA Gbajabiamila condemns killing of Borno rice farmers I didn’t defect to APC over presidential ambition- Umahi No rising of COVID-19 cases in orientation camps Group honours NYSC D-G, others for distinguished service COVID-19: Antibiotics misuse can accelerate antimicrobial resistance – experts NiMet predicts sunshine, cloudiness, Monday to Wednesday 25m Nigerians to own 5m solar systems at N4,000 monthly–Presidency Stakeholders frown at border re-opening for Dangote, BUA coys FG to roll out Autogas programme Dec. 1 APC will clinch two Bayelsa Senate seats in bye-election says Sylva Nation’s electricity grid collapses- TCN People living with HIV/AIDS seek collaboration to end virus by 2030 Lagos graduates 100 women, youth farmers #EndSARS: Association wants FG, states to compensate affected traders Create more awareness on HIV/AIDS to reduce risk of COVID-19, expert urges Youth NGO decries neglect of HIV/AIDS following COVID-19 outbreak National Qur’anic recitation competition goes underway in Gombe Nigeria Idol 2020/2021 audition begins Nov.29 Enugu State NMA gets new leadership SWAN confirms receipt of N11.4m FIFA COVID-19 funds 43 farmers killed by insurgents buried amid tears, wailing Nigerian Navy Sailing Club loses sailor UNFPA advises public against stigmatising people living with HIV Troops raid terrorists’ hideouts, eliminate 5 in Borno Tokyo 2020 Olympics postponement cost organisers $1.9 billion Tyson fights to draw with Jones Jr. in exhibition Lagos Taskforce destroys over 1,700 illegal shanties at Agege #EndSARS: NAN management wants show of patriotism by Nigerians