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Oil prices inch up on faith in supply cuts, demand recovery

Published 06/19/2020, 09:13 AM
Updated 06/19/2020, 09:20 AM
© Reuters.
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By Sonali Paul
MELBOURNE, June 19 (Reuters) - Oil prices pushed higher in
early trade on Friday, building on gains in the previous
session, after OPEC producers and allies promised to meet their
supply cut commitments and two major oil traders said demand was
recovering well.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
climbed 14 cents, or 0.4%, to $38.98 a barrel at 0101 GMT, while
Brent crude LCOc1 futures crawled up 7 cents, or 0.2%, to
$41.58 a barrel. Both contracts rose around 2% on Thursday.
Plans by Iraq and Kazakhstan to compensate for
overproduction in May on their supply cut commitments supported
the market. The promises came out of a meeting by a panel
monitoring compliance by the Organization of Petroleum Exporting
Countries and its allies, a grouping called OPEC+. If the laggard producers do compensate over the next three
months for their overproduction, that will effectively take
extra barrels out of the market, even if OPEC+ does not extend
its record 9.7 million barrels per day supply cut beyond July.
Comments from global oil traders Vitol and Trafigura on a
rebound in oil demand in June, reported by Bloomberg, also
buoyed the market, ANZ Research said.
Trading volumes on Friday, however, were thin, which pointed
to a lack of conviction behind any big push higher, said CMC
Markets chief strategist Michael McCarthy.
On the technical side, he pointed to strong resistance in
the WTI contract between $40 and $41. Analysts see that level as
the point at which more U.S. producers will revive shut-in
wells.
"That militates against aggressive long side trading,"
McCarthy said.


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