Brent crude prices rose for the second consecutive week, finishing above $30 per barrel. We saw the impact of the latest OPEC+ production cut deal as May barrels started loading and helped to re-balance the market. It means that prices almost doubled in the space of two weeks as the market probed a solid floor for settlement as it slowly edged higher.
The upward movement came despite grim economic news from the US, which lost a staggering 20.5 million jobs in April, pushing the unemployment rate to 14.7 percent — the highest since the Great Depression.
As global supply and demand started to realign, physical prices have improved, helped by signs of a Chinese economic recovery. At the same time, the easing of lockdowns in the US has also improved the demand outlook. US drivers consume about 10 percent of global gasoline supplies daily so the easing of restrictions there is a significant development for the crude market — especially as it coincided with a massive drop in US crude production, that fell to 11.9 million barrels a day.
Baker Hughes has reported that the number of oil and gas rigs in the US fell to their lowest level since 1940.
Oil and gas rigs fell to 374, with the total tally sitting at 614 fewer than this time last year.
The period of the “super contango” in the Asian oil benchmark could also be over as more countries ease lockdown measures.