Oil prices rise driven by falling US stocks

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Seoul – Oil prices rose on Thursday after an unexpected drop in US crude stocks, but bleak expectations about the world’s largest economy limited the gains as demand for fuel tumbled due to the Corona virus pandemic and concerns about a possible second wave of cases.

By 6 GMT, Brent crude futures rose 18 cents, or 0.6 percent, to $ 29.37 a barrel. US West Texas Intermediate crude futures rose 23 cents, or 0.9 percent, to $ 25.52 a barrel.

Oil prices have witnessed increases over the past two weeks, with some countries beginning to ease restrictions and public isolation measures related to Corona virus to allow factories and shops to resume work.

But the emergence of new cases in South Korea and China increased fears of a second wave of injuries, which would put pressure on the economic recovery and demand for fuel.

Jerome Powell, chairman of the Federal Reserve, warned on Wednesday of weak economic growth for an “extended period” and called for additional financial spending to tackle the consequences of the virus.

“It is difficult to feel enthusiastic about a steady recovery in oil demand when the world’s largest economy has a lot of uncertainty about the outlook and major risks on the downside,” said Edward Moya, chief market analyst at Awanda.

The decline in US stocks provided some support to prices early in the trading session, but Moya said that more withdrawals of reserves will be required over the next few weeks to support prices.

For its part, the International Energy Agency considered that the outlook for global oil markets “improved somewhat”, with demand slightly stronger than expected, and curbing supply due to the severe collapse of prices.

The agency quoted “Bloomberg” news Thursday, the monthly report of the International Energy Agency that global oil production is on the way to “a historical decline” this month to the lowest level in nine years.

The Organization of the Petroleum Exporting Countries (OPEC) and its partners are working to cut production, while producers outside the organization such as the United States have been forced to cut back on crude extraction.

The Paris-based International Energy Agency, which provides advice to major economies, said, “It was the supply side in which market forces demonstrated their strength and demonstrated that the pain of falling prices would affect all producers … We are witnessing significant cuts in production from countries outside the agreement OPEC Plus is faster than expected. ”

In its most recent report, the agency noted that the oil market is still in a very difficult situation. International crude oil prices have fallen by more than 50% since the beginning of the year, as air traffic has stopped due to the closure to face the Corona pandemic crisis, in addition to the lack of road transport and the closure of factories.

However, the current price of $ 30 a barrel in London is more than $ 10 above its April low.





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