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Oil drops while the highest monthly increase in production cuts

by Bunkerist
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US inventory data express the inadequacy of fuel demand in the world’s largest oil consumer. On top of it, oil prices dropped on Friday driven by tensions in the global financial markets sourced by US-China.

Brent crude slipped 43 cents, or 1.2%, to $34.86 a barrel by 0643 GMT and West Texas Intermediate (WTI) crude was at $33.14 a barrel, down 57 cents, or 1.7%.

Analysts said both contracts have turned to the biggest monthly gains of years due to production cuts and optimism for demand recovery from Chinese-backed prices.

WTI increased 76% in May, achieving the biggest monthly earnings per month, while Brent achieved 38%, the strongest monthly increase since March 1999.

Data from Thursday showed that US crude oil and distilled stocks rose sharply last week. Analysts said the demand for fuel is sluggish despite several states have lifted their travel restrictions applied to prevent coronavirus pandemics.

Producers and traders will focus on updating discussions on output cuts between allies known as OPEC +, including the Organization of Petroleum Exporting Countries (OPEC) and Russia in the second week of June.

Saudi Arabia and some OPEC members are considering maintaining a record production cut of 9.7 million barrels per day during June, but are not yet sure about Russia.

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