Oil makes gains as Opec+ starts record production cut

Oil is headed for its first weekly gain in a month as global production cuts start to lift physical markets and demand shows tentative signs of recovery, reported Bloomberg.

Futures in New York rose as high as $20 a barrel on Friday, before paring gains, it stated. 

US oil companies announced major production closures with Chevron saying it will shut as much as 400,000 barrels of daily output and Exxon Mobil reporting it will cut Permian Rigs by 75% by the end of the year. Concho Resources said it’s curtailing about 4-5% of its production, said the report.

At the same time, Opec+’s pledge to trim supply by 9.7 million barrels a day has gone into effect. Algerian Energy Minister Mohamed Arkab, who holds the rotating presidency of Organization of the Petroleum Exporting Countries (Opec) called on members of the group to implement more than 100% of their agreed production cuts.

“We started last month with a focus on demand destruction and now we’re starting this month with a focus on the supply reduction,” said Olivier Jakob, managing director of consultant Petromatrix.

The price of real crude is reacting to the curbs, with key grades from the Caspian to the North Sea trending higher in recent days, said the Bloomberg report. 

US government data showed gasoline consumption rose by the most in almost a year last week, while rush-hour traffic in some of the biggest cities in China has recovered to pre-virus levels.

Still, oil came off its earlier highs to trade near $19 a barrel on concerns that the industry continues to face a massive supply glut that’s dwarfing early signs of demand recovery, it added.

Meanwhile, recent survey found that Opec oil output had jumped in April to a 13-month high as Saudi Arabia and its Gulf allies opened the taps following the collapse of an Opec-led supply pact, offsetting further declines in Libya, Iran and Venezuela, reported Reuters.

On average, the 13-member Opec had pumped 30.25 million barrels per day (bpd) this month, according to the survey, up 1.61 million bpd from March’s revised figure.

An Opec-led supply pact collapsed on March 6, temporarily ending three years of cooperation and starting a battle for market share. This free-for-all lasted until the producers, known as Opec+, agreed a new cutback from May 1, it added.

Source: http://www.tradearabia.com/news/OGN_367394.html