Oil climbs 2% on U.S. stock draw but gains capped as OPEC+ set to ease cuts
By Devika Krishna Kumar NEW YORK (Reuters) - Oil prices rose 2% on Wednesday, supported by a sharp drop in U.S.
By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices rose 2% on Wednesday, supported by a sharp drop in U.S. crude inventories, but further gains were limited as OPEC and its allies are set to ease supply curbs from August as the global economy gradually recovers from the coronavirus pandemic.
Prices were boosted after data from the Energy Information Administration showed U.S. crude inventories fell 7.5 million barrels last week, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop.
"The story of the report is we will see more draws in the coming weeks," said Phil Flynn, analyst at Price Futures Group.
"We will see tightening of supplies and the market is signalling that we are going to need more oil pretty soon, probably by August."
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have been cutting output since May by 9.7 million barrels per day (bpd), or 10% of global supply, after the virus destroyed a third of global demand.
After July, the record cuts are due to taper to 7.7 million bpd until December.
Saudi Arabia's energy minister Prince Abdulaziz bin Salman said OPEC+ was moving to the next phase of its oil cut pact when the group is expected to ease their reductions as oil demand recovers.
Russian Energy Minister Alexander Novak said a partial restoration of production would benefit the market and that Russia would raise oil output by around 400,000 bpd from August.
"OPEC+ managed to orchestrate the greatest balancing act ever seen in oil market history. But now, the alliance is ready to start concluding the show," said Rystad Energy’s senior oil markets analyst Paola Rodriguez-Masiu. "We see the increase in OPEC+ production boosting crude exports from August onwards as the alliance gradually reopens the oil taps."
On Tuesday, OPEC said it saw demand recovering by 7 million bpd in 2021 after falling by 9 million bpd this year.
The global benchmark Brent has recovered to about $43 a barrel from a 21-year low below $16 in April. The rebound in prices has allowed some U.S. producers to resume suspended production, a move that is set to weigh on OPEC's decision on Wednesday.
"Although the demand for crude has jumped in recent weeks, rising coronavirus cases in the United States along with some cities in other major economies reimposing shutdowns have the potential to hit demand," Lukman Otunuga, senior research analyst at FXTM.
(Additional reporting by Laura Sanicola, Jane Chung, Dmitry Zhdannikov and Bozorgmehr Sharafedin; Editing by Marguerita Choy and Jane Merriman)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Guinea president 'captured', govt dissolved, claim army putschists'; attack on presidential palace repulsed, say authorities
Reports suggest that they captured President Alpha Conde and dissolved the government, bust the ground situation remains unclear
NEW YORK (Reuters) -The price of cryptocurrencies plunged and crypto trading was delayed on Tuesday, a day in which El Salvador ran into snags as the first country to adopt bitcoin as legal tender. Shares of blockchain-related firms also fell as crypto stocks were hit by trading platform outages. But the major focus was on El Salvador, where the government had to temporarily unplug a digital wallet to cope with demand.
By Joseph White and Sanjana Shivdas (Reuters) -The head of Apple Inc's car project, Doug Field, is going to work for Ford Motor Co to lead the automaker's advanced technology and embedded systems efforts, a hiring coup for Ford Chief Executive Jim Farley.