Oil prices jump as demand shows signs of picking up
By Jessica Resnick-Ault NEW YORK (Reuters) - Oil prices rose on Friday, with U.S. crude jumping more than 6% to its highest since March on signs that demand was picking up, with China reporting increased refinery runs and rounding out a week of bullish news on the supply front. West Texas Intermediate (WTI) oil was up $1.79, or 6.4%, at $29.32 a barrel at 12:18 p.m.
By Jessica Resnick-Ault
NEW YORK (Reuters) - Oil prices rose on Friday, with U.S. crude jumping more than 6% to its highest since March on signs that demand was picking up, with China reporting increased refinery runs and rounding out a week of bullish news on the supply front.
West Texas Intermediate (WTI) oil was up $1.79, or 6.4%, at $29.32 a barrel at 12:18 p.m. EST (1618 GMT), after reaching $29.37, its highest since mid-March. WTI soared 9% in the previous session.
Both contracts were on track for a third consecutive week of gains.
"Refinery utilization numbers from China overnight were very good," said Bob Yawger, director of energy futures at Mizuho in New York. "You have to cover your eyes and not look at U.S. refinery utilization, but there are some bright spots."
Amid supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers aimed at reducing a glut, there also are signs of improving demand. Data showed China's daily crude oil use rebounded in April as refineries ramped up operations.
Still, the market remained cautious with the coronavirus pandemic far from over and new clusters emerging in some countries where lockdowns have eased.
"Oil prices have been up significantly since yesterday thanks to a better assessment of the situation by the International Energy Agency (IEA)," Commerzbank said in a note.
The IEA expects global crude inventories to fall by about 5.5 million barrels per day (bpd) in the second half of this year.
It also expects oil demand this year to fall by 8.6 million bpd, which is a smaller decline - by 690,000 bpd - than it forecast last month. It expects non-OPEC supply to fall by 3.2 million bpd.
Barclays raised its forecasts for Brent and WTI by $5-$6 a barrel for 2020 and by $16 a barrel for 2021. It now sees Brent prices averaging $37 a barrel and WTI at $33 this year. For 2021, the bank expects Brent and WTI prices to average $53 and $50 per barrel, respectively.
"The sheer size and speed of the disruption and associated inventory overhang will take time to get fully absorbed, in our view," Barclays analyst Amarpreet Singh said in a note.
Meanwhile U.S. crude inventories fell unexpectedly for the first time since January, the Energy Information Administration said on Wednesday. [EIA/S]
Graphic: Weekly changes in petroleum stocks in the U.S. - https://fingfx.thomsonreuters.com/gfx/editorcharts/bdwvkrmkxpm/eikon.png
On the production side, record cuts of nearly 10 million bpd by OPEC and associated producers - collectively known as OPEC+ - have kicked in for May and June, with Saudi Arabia, Kuwait, and the UAE pledging to cut beyond their commitments.
Oman said on Friday that it is considering cutting output further in June as well.
(Additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing by David Gregorio and Louise Heavens)
This story has not been edited by Firstpost staff and is generated by auto-feed.