Oil posted its longest gain streak in more than a year, spurred by production cuts around the world that have eroded following a stubborn supply glut.
Futures contracts were up 1.3% in New York. Supply data in the United States showed that crude inventories fell for a second week after increasing steadily since January, and that inventories at the Cushing, Oklahoma storage center, fell by a record high. OPEC and its allies cut production and IHS Markit Ltd. says US oil producers are also cutting about 1.75 million barrels a day of existing production by early June.
“There are many accounts that the rebalancing will happen more quickly and be more aggressive than we thought,” said Bart Melek, chief commodity strategy at the Toronto Dominion Bank.
The rise in oil this month to the US $ 30 per barrel range raises the possibility that shale producers will slowly start turning on the taps after futures contracts plunged into negative territory in April, leading to layoffs in the energy sector, a slowdown in drilling and sharp declines in the number of oil rigs in service. Goldman Sachs Group Inc. has said the US shale will emerge from the current crisis in the form of weaker growth and a more cash-generating industry, while consolidation will concentrate the number of players in the sector.
- West Texas Intermediate crude oil for July delivery increased 43 cents to US $ 33.92 per barrel in New York, the highest level since early March.
- Brent crude for July settlement advanced 31 cents to end the session at US $ 36.06 per barrel.
As the sharp drop in inventories at Cushing, the delivery point for WTI futures contracts, indicates that the glut of supply is starting to wane, a surprise increase in gasoline inventories in the United States per week The latter reflects the underlying weakness of demand in the world’s largest economy. The economic outlook remains uncertain, with 2.44 million more Americans applying for unemployment last week, according to Labor Department figures.