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Hazloc Heaters
Copper Tip Energy Services
Hazloc Heaters
Copper Tip Energy

Oil in First Weekly Gain in a Month With Output Cuts Deepening

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These translations are done via Google Translate

By Elizabeth Low and Alex Longley

(Bloomberg) Oil headed for its first weekly gain in a month as global production cuts start to lift physical markets and demand shows tentative signs of recovery.

Futures in New York rose to near $20 a barrel on Friday and are up about $3 this week. U.S. oil majors are announcing major production closures, with Exxon Mobil Corp. and Chevron Corp. planning to shut output following ConocoPhillips curtailments on Thursday. OPEC+ officially started its unprecedented 9.7 million barrels a day of output reductions on Friday.

The price of real crude is reacting to the curbs, with key grades from the Caspian to the North Sea trending higher in recent days. Oil is being helped along by signals that the worst of the demand destruction may have passed. U.S. government data showed gasoline consumption rose by the most in almost a year last week, while rush-hour traffic in some of the biggest cities in China has recovered to pre-virus levels.

Oil futures in New York are set for the first weekly gain in a month

“We started last month with a focus on demand destruction and now we’re starting this month with a focus on the supply reduction,” said Olivier Jakob, managing director of consultant Petromatrix GmbH.


Still, the industry is nowhere close to being out of the woods as a massive glut persists. Royal Dutch Shell Plc on Thursday forecast that its refineries won’t run at more than 70% of their capacity in the current quarter. Turkey will halt a 238,000 barrels a day plant as a result of the slowdown in demand. Global storage is also close to filling up and Citigroup Inc. warned the worst is likely yet to come for the oil market.

  • West Texas Intermediate for June delivery jumped $1.13, or 6%, to $19.97 a barrel as of 8:41 a.m. in New York.
  • Brent for July added 0.1% to $26.50 a barrel.

Since crude plunged into negative territory last week, investors have been fleeing the nearest futures contracts, increasing volatility. The United States Oil Fund LP, which came under pressure from regulators last month due to the size of its WTI position, said on Friday that it will halve holdings in the July contract. The fund earlier said it may expand investments to include products beyond the benchmark New York crude grade.

Other oil-market news
  • Saudi Aramco may be just days away from announcing its official selling prices for June supplies to global customers, but traders and refiners in the prized Asian market have no idea what to expect.
  • The Federal Reserve revamped its Main Street Lending Program in ways that will allow battered oil companies to qualify for the aid after industry allies lobbied the Trump administration for changes.
  • Oil tanker rates are crashing as a pact to limit global crude production begins. Don’t bet on the rout enduring.

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