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UPDATE 4-Oil steadies as demand uncertainty tempers supply cuts

Published 05/25/2020, 03:07 PM
Updated 05/26/2020, 01:20 AM
© Reuters.
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* 4 weeks of gains, but prices still off 45% for year
* U.S.-China tensions cap gains

(Updates prices)
By Ahmad Ghaddar
LONDON, May 25 (Reuters) - Oil prices edged up on Monday in
sluggish trading with holidays in Singapore, London and New
York, as rising concerns over demand recovery offset supply
cuts.
Brent LCOc1 rose to $35.81 a barrel by 1659 GMT, while
U.S. oil CLc1 was flat at $33.74 a barrel. Both are down
around 45% so far this year. There is no U.S. settlement because
of the Memorial Day holiday.
"Uncertainty around the current travel patterns in the U.S.
is so great that the American Automobile Association did not
release its Memorial Day travel forecast," Bjornar Tonhaugen,
head of oil markets at Rystad Energy, said. Rising U.S.-China tensions, between the world's largest oil
consumers, over moves by Beijing to impose security legislation
on Hong Kong also fuelled concerns about the outlook for demand.
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Bilateral relations have soured since the coronavirus
outbreak, with the two countries already at odds over Hong Kong,
human rights, trade and U.S. support for Chinese-claimed Taiwan.
Prices are finding support from global supply cuts with the
Organization of the Petroleum Exporting Countries and its
allies, known as OPEC+, now nearly a month into a deal to
voluntarily withhold 9.7 million barrel per day of production.
And the U.S. rig count, an early indicator of future output,
fell by 21 to a record low 318 in the week to May 22, data from
energy services firm Baker Hughes BKR.N showed. "The huge decline in global oil production has doubtless
been the key factor in the latest surge in oil prices,"
Commerzbank said.

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