Demand rise, output cuts raise Oil prices to $35 – With the global economy gradually reopening and easing off supply oil glut coupled with the implementation of huge production cut oil producers particularly the OPEC+ group, oil prices have begun to rise impressively.
The United States’ benchmark, West Texas Intermediate, yesterday traded 7.1 per cent higher at $31.80 a barrel while the international benchmark, Brent Crude, was up 5.1 per cent at $34.40.
The combination of supply cuts and greater hopes for a demand recovery, among other factors, are boosting oil prices. Both WTI and Brent outperformed on Monday due to “China stimulus measures, decreasing supply and peak virus hopes,” analysts said.
They said oil supply cuts are paying off as crude oil prices jumped to a two-month high on Monday, reflecting output cuts and investors betting that looser lockdowns will boost demand for fuel.
According to Reuters, Asian shares crept ahead on Monday and oil prices hit a five-week high as more countries re-opened their economies, stirring hopes the world was nearer to emerging from recession.
Summer weather is enticing much of the world to emerge from coronavirus lockdowns as centres of the outbreak from New York to Italy and Spain gradually lift restrictions that have kept millions cooped up for months.
“However, incoming data from most economies highlight the depth of the contraction, raising risks of longer-term scarring that might undermine the recovery.”