Oil Extends Rally After OPEC+ Prolongs Record Production Cuts - Yahoo Canada Finance

(Bloomberg) -- Oil rose toward $43 a barrel in London after OPEC and its allies agreed to extend historic output curbs by an extra month.

Brent futures added as much as 2.6% and are heading for their longest run of gains since February. The extension is a victory for Saudi Arabia and Russia, which were deadlocked in a brutal price war just two months ago. OPEC+’s de-facto leaders showed their commitment to shore up oil markets globally, and even cajoled Iraq, Nigeria and other laggards to fulfill their promises to reduce production.

Following the new deal, Saudi Arabia pressed on by increasing some crude prices by the most in at least two decades. The hikes erased almost all of the discounts the kingdom made during its brief price war with Russia, with the steepest increases hitting July exports to Asia.

The supply cuts and a rebound in demand have helped oil prices double since April. China’s crude oil imports surged to a record high last month, while consumption in other major consumers such as India is improving. Still, a sustained rebound in prices may be hampered by deteriorating relations between Washington and Beijing, a second wave of infections, or returning U.S. shale supply.

See also: Saudi Arabia and Russia Unite to Tackle OPEC’s Pinocchio Problem

“We still think there is room for oil prices to move higher today” because of the extended output curbs and stronger demand in China, said Harry Tchilinguirian, oil strategist at BNP Paribas SA.

As OPEC met virtually over the weekend, Tropical Storm Cristobal was swirling over the Gulf of Mexico. Offshore drillers idled about a third of oil production, amounting to about 636,000 barrels of daily output, due to the storm, according to the Bureau of Safety and Environmental Enforcement. The storm has now crossed the coast.

Meanwhile, Libya’s biggest oil fields are gradually resuming production after a five-month shutdown due to civil war. Output will start at an initial 30,000 barrels a day at Sharara and it will take three months to return to full capacity, according to National Oil Corp. Supply from El-Feel also restarted on Sunday, according to a person with direct knowledge of the situation.

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Let's block ads! (Why?)

https://news.google.com/__i/rss/rd/articles/CBMiTGh0dHBzOi8vY2EuZmluYW5jZS55YWhvby5jb20vbmV3cy9vaWwtYWR2YW5jZXMtdG93YXJkLTQzLW9wZWMtMjIxODIwMjI2Lmh0bWzSAVRodHRwczovL2NhLmZpbmFuY2UueWFob28uY29tL2FtcGh0bWwvbmV3cy9vaWwtYWR2YW5jZXMtdG93YXJkLTQzLW9wZWMtMjIxODIwMjI2Lmh0bWw?oc=5

2020-06-08 09:15:00Z
CBMiTGh0dHBzOi8vY2EuZmluYW5jZS55YWhvby5jb20vbmV3cy9vaWwtYWR2YW5jZXMtdG93YXJkLTQzLW9wZWMtMjIxODIwMjI2Lmh0bWzSAVRodHRwczovL2NhLmZpbmFuY2UueWFob28uY29tL2FtcGh0bWwvbmV3cy9vaWwtYWR2YW5jZXMtdG93YXJkLTQzLW9wZWMtMjIxODIwMjI2Lmh0bWw