Crude Oil Futures Settle Higher Again On Optimism About Supply Cuts, Higher Demand
Crude oil prices climbed higher on Friday amid continued optimism that the members of the Organization of the Petroleum Exporting Countries and their allies will strictly comply with agreed production cuts to balance demand-supply position and help stabilize prices.
West Texas Intermediate Crude oil futures for July ended up $0.91 or about 2.3% at $39.75 a barrel after hitting a high of $40.50 early on in the session. Midway through the session, oil prices tumbled into the red on concerns the rapid spread of coronavirus infections in the U.S. could put brakes on recovery.
Brent crude futures were up by over $0.60 at $42.14, despite falling from a high of $42.92 a barrel.
The sharp jump in prices Friday morning was due to positive reaction to reports that the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing nations on Thursday promised full conformity with oil output cuts from July through September to balance the global oil market.
“Attainment of 100 percent conformity from all participating countries is not only fair and equitable, but vital for the ongoing and timely rebalancing efforts and helping deliver a sustainable oil market stability,” the 23-member group said in a statement.
Iraq and Kazakhstan have already submitted their compensation schedules, while other underperforming participants have until next Monday, June 22 to submit their schedules, OPEC said in the statement.
Expectations that energy demand in Europe will gradually increase thanks to reopening of several economies in the continent supported crude prices.
Meanwhile, a report from Baker Hughes said oil rig count in the U.S. dropped by 13 to 266 this week, falling for a seventh successive week and hitting a record low as well.