(Bloomberg) -Oil rose above $34 a barrel in New York on signs that demand for physical crude continues to recover.
Nigeria, whose millions of barrels of unsold crude were the epitome of the oil market’s glut in recent weeks, lifted the selling price for its supplies in June from record lows. Algeria also hiked its official prices by almost $3 a barrel. The moves by the two OPEC nations show increasing confidence that they can sell their barrels at costlier levels, providing them some respite after being hammered by the coronavirus outbreak.
Oil has surged more than 80% this month as demand has picked up and output cuts have started to chip away at a massive oversupply. That has also led to a steady flattening in the futures curve — a signal market supplies are growing tighter. Russia, a key member of the OPEC+ alliance that has pledged record output cuts, expects the market to balance in June or July.
a screenshot of a cell phone: Oil has been posting weekly gains as the market rebalances
© Bloomberg Oil has been posting weekly gains as the market rebalances
“Global supply is still heading lower while demand is rising,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “This all lays the ground for higher prices down the road.”
West Texas Intermediate crude for July delivery rose $1.13 from Friday’s close to $34.38 a barrel as of 9:19 a.m. New York timeBrent for July settlement added 75 cents, or 2.1%, to $36.28 a barrel
Around the world, producers have slashed global production by 14 million to 15 million barrels a day so far, Russian Energy Minister Alexander Novak said on Monday. The nation sees the current global surplus at 7 million to 12 million barrels a day, RIA Novosti reported Monday.
See also: Urals Oil Seaborne Loadings to Drop to 5-Year Low in June
Though output has been cut and demand is recovering, there are ongoing signs of the damage the virus has wrought on the industry. Both refineries in the Philippines have now been shut as a result of weak fuel demand, according to their operators.
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