On Tuesday, crude oil prices rose after the US Energy Information Administration (EIA) said the country’s output would post the biggest fall ever recorded in April as major producers are doing cuts.
Brent crude oil futures climbed by 1.8% or 56 cents to USD32.30/barrel by 00.17 GMT, continuing the 0.8% increase on Monday. The US WTI also jumped by 2.1% or 47 cents to USD22.88/barrel after slumping by 1.5% in the session prior.
The EIA predicted the US shale oil output to score the sharpest monthly drop on the record this month with a loss of close to 200,000 bpd, leading to a drop in output to 8.7 million bpd.
Several US producers including majors like Exxon and Chevron have announced their spending cuts and production curbs in the coming months.
The estimate, combined with the agreed cut from the Organization of Petroleum Exporting Countries and its non-member oil major allies (OPEC+) by 9.7 million bpd in May and June, gives a breath of fresh air to the market with a production reduction in a total of around 19.5 million bpd.
However, analysts, oil industry executives, and others are not so positive regarding the impact of the upcoming cuts to offset the loss of a third of global oil demand due to the coronavirus pandemic as oil prices are still down by more than 50% so far in 2020.
FOREX.com noted that unless the economy is recovering in a dramatic V-shape, the cuts would less likely to bring the market back into balance.
Stockpiles will still fill up fast even as several G20 countries have agreed to purchase oil for their national reserves.
