(Bloomberg) – Oil has reached its highest level in more than five weeks as signs emerge that OPEC and its allies are cutting crude oil deliveries at a time when consumption is picking up.
Futures contracts in New York gained 9% on Thursday. OPEC + cut exports by 5.96 million barrels a day during the first 14 days of May, according to Petro-Logistics. Meanwhile, Saudi Aramco has cut its oil sales in the United States and Europe by about half. The International Energy Agency said prospects for global markets were improving with slightly stronger than expected demand, while leading oil company BP Plc said consumption jumped this week as cars returned on the roads.
The drop in exports shows “that they are respecting the OPEC + agreement,” said Andrew Lebow, senior partner at the Commodity Research Group. The measures taken have contributed to “a more constructive scenario for the market”.
Investors remain focused on the demand trajectory, fearing that a resurgence of coronavirus cases will derail an economic rebound. As the IEA joined Saudi Arabia and Russia to see signs of improving consumption, the market has yet to recover from an unprecedented rout that pushed futures on West Texas Intermediate into negative territory last month.
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“There is a little more optimism than the darkest days for the market are behind us,” said Judith Dwarkin, chief economist at RS Energy Group.
Aramco will cut shipments to certain buyers in the United States and Europe by up to 70%, according to someone familiar with the situation. Eight of the 12 Asian refiners who saw their forward supply reduced said the reductions were substantial, with reductions of 20% to 30% or more.
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