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Oil climbs as suppliers stick to output cuts, coronavirus lockdowns ease

Published 05/26/2020, 09:04 AM
Updated 05/26/2020, 09:10 AM
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By Sonali Paul
MELBOURNE, May 26 (Reuters) - Oil prices rose on Tuesday on
clear signs that producers are sticking to commitments to cut
crude supply as more cars get back on the road with coronavirus
lockdowns easing around the world.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
gained 2.3%, or 75 cents, to $34.00 as of 0057 GMT. There was no
WTI settlement on Monday because of the U.S. Memorial Day
holiday.
Brent crude LCOc1 futures inched up 0.7%, or 23 cents to
$35.76, adding to a 1.1% gain on Monday in thin holiday trading.
The market was buoyed by comments from Russia reporting its
oil output had nearly dropped to its target of 8.5 million
barrels per day (bpd) for May and June under its supply cut deal
with the Organization of the Petroleum Exporting Countries
(OPEC) and other leading producers, a grouping known as OPEC+.
"There's definitely a feeling those cuts have come through
as well as you could expect," said Daniel Hynes, senior
commodity strategist at Australia and New Zealand Banking Group.
OPEC+ countries are set to meet again in early June to
discuss maintaining their supply cuts to shore up prices, which
are still down around 45% since the start of the year. The big
producers agreed in April to cut output by nearly 10 million bpd
for May and June.
Russia's energy ministry on Monday quoted minister Alexander
Novak as saying a rise in fuel demand should help cut the
current global surplus of around 7-12 million bpd by June or
July.
"With economies restarting, the focus definitely is on the
improvement in the fundamentals, rather than what seemed like a
complete collapse in demand only a few weeks ago," said
strategist Hynes.


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