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Record production cuts move U.S. oil to monthly gains

by Bunkerist
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Oil prices rose on Friday, and moved to monthly earnings, with the news of US’s record production cuts in May.

Brent crude settled up 37 cents, or 0.9%, at $43.31 a barrel.

WTI crude was up 35 cents, or 0.9%, at $40.27 after dropping 3.3% in the previous session, also off lows not seen since July 10.

Brent crude oil recorded fourth month of gains, and U.S. crude posted a third month. Both rose from the depth of crash in April, when most of the world began to lockdown due to a coronavirus pandemic.

On Friday, US crude oil production was reported a drop to 10 million bpd, down a record drop of 2 million barrels a day in May.

On Thursday, it was announced that the gross domestic product in the US collapsed by 32.9% annually, which was the steepest decline since 1947. The dollar expanded its dramatic decline on Friday, continuing its biggest monthly decline in the past decade.

Investors, as the currency has weakened, they rather consider commodities in dollars as investment instruments.

As oil is viewed as a risk to inflation, global stimulus and weak dollar will continue to support oil prices.

Looking at the global outlook, increased coronavirus infections pumps the risk up of renewed lockdowns and also threatens recovery in demand.

Weak refining margins, low Chinese oil demand and high crude oil stocks continue to put pressure on prices.

Oil production increases, which will start in August by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, will be closely monitored in the coming days.Following the pandemic, the group implemented a 9.7 million barrels bpd reduction strategy till the end of July, and plans to increase production by about 1.5 million barrels a day globally, starting Saturday.

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