Adedapo Adesanya
By Adedapo Adesanya
Crude oil prices rose more than 4 percent on Friday, closing the week positive and resulting into a second straight weekly gains since the commencement of the production cut deal signed to reduce the supply glut facing the oil market.
Last night, the Brent crude gained 4.79 percent or $1.41 to sell at $30.87 per barrel, while the US West Texas Intermediate (WTI) crude rose by 4.25 percent or $1.00 to trade at $24.54 per barrel.
Prices improved yesteerday as US producers rapidly shut crude production with reports showing that North American oil companies have shut production faster than analysts expected and will withdraw about 1.7 million barrels per day (bpd) of output by the end of June.
These cuts will complement those agreed by the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, (OPEC+), which took out a record 9.7 million barrels per day from the market since May 1, 2020.
However, there are still concerns about OPEC producers complying with the deal. For instance, Iraq is yet to inform its regular oil buyers of reduction to its exports, suggesting that it is struggling to fully implement the agreement reached last month with other producers.
It was observed that prices were supported on Friday due to the gradual opening of economies globally. Australia is set to be the latest country to begin easing restrictions on movement as the country’s infections from the virus slows.
The Australian government has said it will loosen the cessation in stages over four weeks, while France, some parts of the United States and Pakistan are also planning to ease restrictions in the coming weeks.
Market participants are watching as the economic crisis unfold in the United States and how it will affect oil demand in the coming months. The world’s biggest economy lost 20.5 million jobs in April, the largest since the Great Depression of the 1930’s.
An unprecedented collapse in April driven by the coronavirus fallout sent the unemployment rate to 14.7 percent, well beyond the last major crisis of 2009 during the global financial crisis. The jobless rate in March was 4.4 percent.
President Donald Trump has said he will “bring it back” saying the job losses were not a surprise.
