Brent crude rose $1.03, or 2.5%, to $42.54 by 0945 GMT, the highest since June 8. U.S. West Texas Intermediate (WTI) crude CLc1 climbed $1.17, or 3%, to $40.01. “The key takeaway is that OPEC compliance will improve in the coming months,” said Stephen Brennock of broker PVM.
Both contracts rose about 2% on Thursday and are heading for weekly gains of more than 9%. Brent has more than doubled since hitting a 21-year low in April, helped by record OPEC supply cuts of 9.7 million barrels per day (bpd), or 10% of world demand, and an easing of government lockdowns imposed to control the coronavirus. Fuel demand in Europe is staging a gradual recovery after the height of the lockdowns in April but remains well below normal, data from several countries shows.
In a further sign of market recovery, Brent on Thursday moved into backwardation, where oil for immediate delivery costs more than supply later, for the first time since March. A premium for oil for immediate delivery usually indicates tightening supply and encourages storage to be drawn down. U.S. crude stocks hit another record this week, but fuel inventories fell.
Oil tops $42 as OPEC laggards pledge better compliance, Reuters, Jun 19