Oil rises as production cuts accelerates



Al Ain newsletter Agencies
On Thursday, oil prices surged strongly, continuing to recover after major crude producing countries said they would accelerate planned production cuts in order to address a sharp collapse in demand from the Covid 19-pandemic.

Brent rose 96 cents, or 4.7%, to set the settlement price at $ 21.33 a barrel, while West Texas Intermediate jumped $ 2.72, or 19.7%, to close at $ 16.50.

US West Texas Intermediate crude futures closed at minus $ 37.63 a barrel on Monday, in the worst drop in the contract ever. Brent tumbled global benchmark on Tuesday, hitting a 20-year low before recovering.

Since the beginning of the year, both measurements have lost more than two-thirds of their value. Fuel demand is about 30% low around the world in April, and supply will remain above demand for months to come due to the pandemic.

“We see a real reaction within the American industry to these very low prices, which instills some hope that allows prices to have some recovery … but it is still difficult to get excited by just a little more,” said John Kildoff, partner at hedge fund AGENE CAPITAL in New York. On $ 15 a barrel. ”

He was referring to the decline in the number of American oil rigs operating to the lowest levels since 2016 and the decrease in US production of crude 100 thousand barrels per day to 12.2 million barrels per day last week.

The World Bank cut its forecast for oil and minerals prices on Thursday, due to the economic repercussions of the Corona virus pandemic.

The bank said that it is expected that the average price of crude oil will reach 35 dollars a barrel this year, down 43% from the 2019 average, and in a sharp decrease from its forecast issued last October.

The Organization of Petroleum Exporting Countries and other oil producing countries agreed, within the framework of the OPEC + coalition, this month to cut production by an unprecedented amount of 9.7 million barrels per day, or about 10% of the global supply, to support crude prices, but prices continued to decline.

Kuwait said on Thursday that it had begun to reduce its oil supplies to the global market, before the date of the first of May specified for the entry into force of the agreement of production cuts.


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