Output cuts by OPEC producers to ease supply glut fears and falling US crude inventories have edged oil prices higher.
According to Reuters, Brent crude futures for July delivery rose 33 cents at $36.08 per barrel, while US West Texas Intermediate (WTI) crude futures increased 20 cents at $33.69 a barrel.
US crude inventories at the Cushing storage hub in Oklahoma has dropped by 5.6 million barrels.
The news agency quoted Capital Economics as saying in a note: “While signs that WTI storage pressures are abating is positive for prices, the latest report shows that the fall in stocks owes more to supply factors than growing product demand.”
Lingering concerns over the economic disruption from the coronavirus outbreak, however, have kept a lid on gains.
Data released by industry group Energy Information Administration (EIA) reported a fall in the US crude inventories by five million barrels in the week that ended on 15 May.
Prices have been supported by shipping data showing that the OPEC+ Group is complying with their committed output cuts of approximately ten million bpd. This officially started on 1 May.
In reality, physical crude markets are hinting a quick shift from an extensive over-supply as a result of the coronavirus lockdowns last month towards an expected under-supply in the second half this year, according to OilPrice.
Meanwhile, Minutes from the US central bank’s policy meeting that took place from 28-29 April showed that Federal Reserve policymakers repeated a vow to take all the necessary steps to prop up the country’s economy, according to Reuters.