(Bloomberg) -- Oil held gains near the highest level in more than three months on optimism easing lockdown restrictions will increase demand further, while supply cuts boost physical crude prices.
Futures in New York have gained in recent days to trade near $41 a barrel as some U.S. states move forward with the phased reopening of their economies, despite many regions still struggling to bring the coronavirus under control. Sentiment has also been bolstered by OPEC+ output cuts, with physical oil prices rising across Europe due to deep supply curbs by Russia.
Oil has rallied since plunging below zero in April and is now trading at levels last seen before Russia and Saudi Arabia engaged in a damaging, although short-lived, price war. The kingdom’s Energy Minister Prince Abdulaziz bin Salman said last week that OPEC+ is on track to rebalance the market, and some of the world’s largest traders are seeing a rapid recovery in demand.
Delta Air Lines (NYSE:DAL) is resuming flights to China, and New Jersey Governor Phil Murphy said that Atlantic City casinos and indoor dining will reopen statewide on July 2. The U.K. reported fewer than 1,000 new cases for the first time since its lockdown was declared March 23.
Derivatives contracts for Russia’s flagship Urals grade soared to a premium of more than $2 a barrel to the Dated Brent benchmark last week, compared with a discount of about $4.50 during oil’s plunge in April. That’s the strongest level since at least 2015, according to brokers and ICE (NYSE:ICE) Futures Europe data.
Speculators are starting to put money back into products they had shunned during the rout. Money mangers last week had their biggest net-long position in Europe’s diesel benchmark since January, according to ICE Futures Europe data. In contrast, bullish bets declined for WTI and were steady for Brent.
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