Brent crude oil rebounded to a near 20-week high at $42.80 per barrel as WTI also rose to $40.32 per barrel.
Brent averaged $40 per barrel for the month of June, almost the same as for the entire first half of the year.
Oil prices have moved in a narrow band for most of the past two months as OPEC+ output cuts achieved the desired goal of bringing stability to a market threatened by volatility.
Now that another price plunge of the kind seen in April appears unlikely, the second half of the year may witness an even higher average price.
The second half of 2020 got off to a positive start for oil exporters as global demand started to recover and floating storage also began to deplete. Moreover, positive economic and jobs data from the US added to the upward momentum, more than offsetting worries about the surge in coronavirus cases in the world’s largest economy and largest consumer of crude oil.
The US Energy Information Administration reported the first drop in crude oil inventory data in four weeks. However, stocks still stand at 15 percent above the five-year average for this time of the year at 533.5 million barrels. US refineries continue to operate at a low capacity of 75.5 percent despite the supposedly “high” demand summer for gasoline.
China crude oil imports reflected an increase in buying which coincided with an improvement in the manufacturing purchasing managers’ index (PMI), which followed the easing of lockdowns.
Such positive global manufacturing data was made possible by the OPEC+ output cuts which helped to balance the market.
Saudi Arabia has led from the front in making good on its commitments to cut output. It all bodes well for the second half of 2020.