Oil rose past $42 a barrel on Friday, increasing the gains recorded at the last session, after OPEC producers and allies agreed to meet supply cuts and indications emerged that demand was recovering.
Iraq and Kazakhstan, during a meeting of an OPEC+ panel on Thursday, vowed to comply more with production cuts, sources told Reuters. By implication, curbs by the Organisation of the Petroleum Exporting Countries and allies, known as OPEC+, could deepen in July.
“There is enthusiasm in the market that oil supply is still under control. A positive OPEC+ meeting does that and yesterday’s session helped renew confidence,” said Paola Rodriguez Masiu, analyst at Rystad Energy.
Brent crude futures leapt by $1.12 or 2.70% to $42.63 per barrel at 11:21 West Africa Time, its highest since 8th June while U.S. West Texas Intermediate (WTI) crude futures climbed by $1.22 or 3.14% to $40.06 a barrel.
Nigeria’s Bonny Light improved by $1.01 or 2.55% to $40.68 per barrel at the last session while another major national grade, Qua Iboe, was up by $1.61 or 3.97% at $42.41 a barrel.
“The key takeaway is that OPEC+ compliance will improve in the coming months,” said Stephen Brennock of broker PVM.
Read also: Oil prices rise, as U.S inventories fall, Bonny Light gains 0.97%
Both Brent and WTI gained around 2% on Thursday and are approaching weekly gains of over 9%.
Brent has advanced by over 100% since touching a 21-year low in April, thanks to record OPEC+ production cuts of 9.7 million barrels per day (bpd) or 10% of global demand in pre-COVID-19 days, and relaxation of government lockdowns imposes to contain the spread of the coronavirus epidemic.
Fuel demand in Europe is launching a steady rebound after the peak of the lockdowns in April but remains substantially lower than normal, data from many countries shows.
In another sign of market recovery, Brent moved on Thursday into backwardation, a situation in which oil for immediate delivery costs more than the one to be supplied later, for the first time since March.
U.S. crude stocks attained another record this week even though fuel inventories declined.
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