Oil prices rose on Friday, with the easing of restrictions on coronavirus outbreak and recovery of crude oil demand in China, may boost the hopes that global supply could begin to decline.
Brent crude was up 39 cents, or 1.3% at $31.52 a barrel by 0333 GMT, after rising nearly 7% on Thursday. The global benchmark is heading for a 1.8% gain on the week after rising for the previous two weeks.
West Texas Intermediate (WTI) crude oil was up 19 cents, or 0.7%, at $27.75 a barrel, having jumped 9% in the previous session. WTI is heading for a third weekly increase, up more than 12%.
The Organization of Petroleum Exporting Countries (OPEC) and other major producers are experiencing positive developments on the supply cuts and demand side. Data released on Friday show that refinery activities are accelerating and China’s daily crude oil consumption improved in April.
Still, the aspect of the market is positive but far from an exaggeration, in some countries where coronavirus pandemic lockups are alleviated, new cases are emerging unfortunately.
Data in the market is improving, but still, given that we are in an environment where there is an excess of stock, uptrend is limited. Despite the optimistic mood that stocks are running low, there is still plenty of stock that the market has to digest.
According to sources the crude oil stocks are expected to be dropped about 5.5 million barrels (bpd) in the second half of this year. US crude oil inventories are down for the first time in 15 weeks as stated on Wednesday.
Supply cuts were supposed to increase the trend towards low inventories, but US crude oil is unlikely to see strong gains in a short while.
On the production side, allied producers, known as OPEC and OPEC +, have pledged to cut production by about 10 million bpd, with Saudi Arabia promising to expand its planned cuts in June this week, reducing supply by about 5 million bpd. Now, with a possible decision of the group at their next meeting, the production cuts made in May and June are expected to be applied also in the following months.