Oil prices rose to their highest since March, supported by lower U.S. crude inventories, OPEC-led supply cuts and demand recovery as governments ease restrictions.
Crude prices have slumped in 2020, with global benchmark Brent hitting a 21-year low below $16 a barrel in April. With fuel use rising and more signs that the supply glut is being tackled, Brent has since more than doubled.
In the latest sign the supply glut is easing, U.S. crude inventories fell by 5 million barrels last week. Analysts had expected an increase and a demand recovery. At the same time, there is evidence of recovering fuel use.
Physical crude markets, at historic lows just weeks ago, are also rising.
The Organization of the Petroleum Exporting Countries, Russia and other allies agreed to cut supply by a record 9.7 million bpd from May 1. So far in May, OPEC+ has cut oil exports by about 6 million bpd, according to companies that track the flows. This cut suggested a strong start in complying with the deal. OPEC says the market has responded well.
U.S.-China tensions couldn’t stop oil prices from marching to a 2-1/2 month high. On Wednesday, U.S. Secretary of State Mike Pompeo had called China’s $2 billion pledge to fight the pandemic as “paltry”. There was also sparring over democracy erosion in Hong Kong and a sale of U.S. torpedoes to Taiwan.
Brent crude for July rose $1.17, or 3.3%, to $36.92 per barrel by 1340 GMT. U.S. WTI crude climbed 96 cents, or 2.9%, to $34.45. Both benchmarks are at their highest since March 11.
U.S. weekly jobless claims came in at a seasonally adjusted 2.4 million.
START TRADINGForex – Demand recovery sends oil at highest since March
It was also a big day for data and central bankers. Purchasing manager index surveys (PMIs) from Europe had already confirmed that economic activity has begun to return. Dire economic data failed to change sentiment amid U.S.-China tensions.
The dollar climbed to $1.0956 per euro and rose to $1.2291 against the British pound before twitching back again. The dollar index fell 0.12% to 99.06 while U.S. stock futures were trading in the red as China-U.S. trade tensions swirled.
The greenback also gained against the Australian and New Zealand dollars, reflecting the cautious mood of the markets.
The euro was set for a fifth consecutive day of gains on Thursday as optimism about a closer fiscal union in Europe remained high among investors.
Sterling edged lower on Thursday against both the U.S. dollar and the euro. A combination of business activity data and the risk of sub-zero interest rates weighed on the pound.
The British currency is falling for a second consecutive day and has dropped nearly 3% against the dollar in May. The pound was last down 0.2% versus the dollar at $1.2214. Further, it was last down 0.1% against the euro to 89.81 pence after touching 90 pence, its weakest since March 27.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money