On Friday, oil prices rose following the commitments of the world’s top oil producers on the output cuts, along with the compensation commitments from countries lacking in compliance to the oil output cuts pact.
By 06.39 GMT, Brent crude oil futures rose by 1.5% or 61 cents to USD42.12/barrel, the highest in more than a week. US WTI crude futures inched up by 1.5% or 60 cents to USD39.44/barrel. Both benchmarks posted climbs by 2% on Thursday and head to a close to 9% weekly gains.
The Organization of Petroleum Exporting Countries and its allies (OPEC+)’s panel monitoring meeting on Thursday resulted in laggard countries Iraq and Kazakhstan to commit in compensation for their overproduction of oil in May.
The optimism on the commitment drove Brent to move to backwardation on Thursday, for the first time since early March. The August contract jumped to 9 cents above September on Friday.
Other than that, the forecasts from global oil traders Vitol and Trafigura on improving oil demand in June also buoyed the prices.
The oil markets even shrugged off the builds in US oil inventories to a new record high. According to the US Energy Information Administration (EIA), the country’s crude stockpiles jumped by 1.2 million barrels in the week ended June 12 to 539.3 million barrels.
Meanwhile, analyst Michael McCarthy of CMC Markets denoted at the strong resistance in the WTI contract between USD40-41. The point is seen as a turning point for US producers to revive shut-in wells.
