Oil futures rose on Thursday, adding to recent gains that have pushed both the international and the U.S. benchmark contracts to around 2 ½ month peaks, as a slowdown in supplies and hope for higher demand help prices recover some of their recent losses.
In May thus far, the Organization of the Petroleum Exporting Countries and their allies have cut oil exports by some 6 million barrels a day, Reuters reported, citing companies that track crude flows. An agreement between the group of producers, known as OPEC+, calls for cuts of 9.7 million barrels to the end of June, with Saudi Arabia among those who have pledged extra reductions.
Data from the Energy Information Administration was also supportive for prices, showing crude stocks at the storage hub in Cushing, Okla., fell by about 5.5 million barrels for the week. The data also represented a second weekly decline in overall U.S. crude stockpiles, helping to ease concerns over tightening storage space that had contributed to a precipitous downturn in the price of the commodity.
“Given the level of production cuts at this point and the improving economic prospects, there’s no reason it can’t continue to climb higher,” wrote Craig Erlam, senior market analyst at brokerage Oanda in a Thursday research note. He estimated that “although it may soon start to lose momentum given the sheer size of the bounceback we’ve seen. The next big test to the upside, above $35, is $37.50 and then $40.”
July West Texas Intermediate oil CLN20, +1.22% CL.1, +1.22% rose 60 cents, or 1.8%, to $34.09 a barrel on the New York Mercantile Exchange, following a 4.8% rally on Wednesday that pushed the U.S. benchmark to its highest finish since March 10, based on the front-month contracts, according to Dow Jones Market Data.
Meanwhile, global benchmark Brent crude for July delivery BRN.1, +1.45% BRNN20, +1.45% added 78 cents, or 2.2%, to reach $36.53 a barrel on ICE Futures Europe—on track to settle at its highest since early March.
So far this month, WTI has climbed nearly 80%, while Brent oil has rallied by more than 40%.
Demand is coming back slowly as business lockdowns gradually end with the coronavirus pandemic receding, while OPEC+ production cut and lower shale output has reduced the excess in supply, Jasper Lawler, head of research at London Capital Group, wrote in a research note Thursday.
Adding further hope to a recovery from the deadly pandemic Thursday, data in Europe showed improvement. In the U.S., the number of jobless claims, on an adjusted basis, stood at 2.44 million last week, but has fallen for seven straight weeks.
Natural-gas futures, meanwhile, held onto earlier weakness after the U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 81 billion cubic feet for the week ended May 15. That matched the average increase forecasted by analysts polled by S&P Global Platts.
June natural gas NGM20, -2.65% fell 3.7 cents, or 2.1%, to $1.734 per million British thermal units.
Among the petroleum products, June gasoline RBM20, -0.46% edged down by 0.1% to $1.0423 a gallon and June heating oil HOM20, +0.45% added 0.2% to 99.23 cents a gallon.
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