Brent Hits $43 as Producers Tighten Crude Supply

By Adedapo Adesanya

Oil prices rose higher on Monday as traders banked on tighter supplies from major producers, leading the Brent crude to trade around the $43 region.

The oil futures rose by 85 cents or 2.01 percent to sell at $43.04 per barrel, while the US West Texas Intermediate (WTI) crude was at $40.60 per barrel, up by 85 cents equivalent to 2.14 percent.

This means oil prices kept up the momentum built at the market last week after gaining about 9 percent, supported by a recovery in fuel demand as lockdowns eased and economic activity resumed.

Analysts believe that prices could have moved higher but were restricted by increasing virus cases around the world.

The World Health Organization (WHO) reported the largest single-day increase in coronavirus cases on Sunday, registering more than 183,000 new infections in 24 hours, bringing the total to 9 million cases worldwide, with more than 465,000 deaths

In the US, the world’s largest oil producer, infections of the virus increased over the weekend, while places outside of the US also saw cases climb. South Korea on Monday declared itself in the midst of a second wave. Germany also saw its rate of infection rise.

However, experts suggested that crude prices, after suffering in March and April, and even falling into negative territory, show improved uptake as economies see some signs of recovery from the pandemic, even if infections have been rising.

Oil prices improved recently as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to extend a global cut of 9.7 million barrels a day to the end of July.

It is still not clear if OPEC and allies like Russia are willing to extend production cuts into August. OPEC+ said it would review its output reductions monthly, with the next technical committee meeting set for July 15.

But a record rise in global coronavirus cases raised concerns a recovery in fuel demand could stall, checking gains. The economic damage associated with a new round of COVID-19 countermeasures will likely contain any investor enthusiasm and will be bad for oil prices.