By Adedapo Adesanya
Oil futures finished higher Tuesday with continued cuts in crude production and growth in demand as lockdowns ease around the world continue to help the market.
With these, supply and demand are both finding a balance, propping up prices, with recent estimates citing a dop of 13-15 million barrels per day in terms of global production.
The international crude, Brent Crude, closed up 53 cents or 1.49 percent at $36.16 per barrel, while US oil, the West Texas Intermediate (WTI) crude was up by 87 cents or 2.13 percent at $34.73 per barrel.
Both futures have risen for the past four weeks as news of gradual drop in oversupply have been witnessed as more people begin to move around after more than a month long restrictions on movement.
Also, compliance from the Organisation of the Petroleum Exporting Countries (OPEC) and its oil-producing allies to take off 9.7 million barrels per day of the output is still a factor that is helping the market.
Also helping prices was remarks made by a chief party to the OPEC+ deal. Russia’s energy minister, Mr Alexander Novak said the global oil market was on track to balance by June or July.
The prices and demand of the commodity had been hit by the coronavirus pandemic in previous months, but Mr Novak noted that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million barrels per day by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45 percent since the start of the year.
Analysts believe that the 16 million barrels per day oversupply in crude during April could be reversed altogether by June, helped by a 4 million barrels per day recovery in crude demand and a 12 million barrels cut in crude supply.
With efforts by OPEC+ pulling off nearly 9 million barrels per day while non-OPEC+ crude supply is down by more than 3.5 million barrels per day from March levels.
Looking ahead, US data will be particularly important to watch this week as last week’s Energy Information Administration (EIA) report on petroleum supplies showed a slow down in rising demand, but there are signs that it should return to growth in Thursday’s report.
The EIA will release its weekly report on Thursday, a day later than usual because of Monday’s holiday.
Dipo Olowookere