Oil rose on Thursday to its highest since March, supported by lower US crude inventories, OPEC-led supply cuts and recovering demand as governments ease restrictions on people’s movements imposed due to the coronavirus crisis.
Crude prices have slumped in 2020, with global benchmark Brent hitting a 21-year low below $16 a barrel in April as demand collapsed. With fuel use rising and more signs that the supply glut is being tackled, Brent has since more than doubled.
Brent crude for July rose 76 cents, or 2.1 percent, to $36.51 per barrel by 1220 GMT. US West Texas Intermediate crude climbed 51 cents, or 1.5 percent, to $34.00. Both benchmarks are at their highest since March 11.
“Global supply has been curtailed to a great degree,” said Rystad Energy analyst Paola Rodriguez Masiu. “We are on a clear path to a gradual recovery now.”
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In the latest sign of a supply glut easing, US crude inventories fell by 5 million barrels last week. Analysts had expected an increase.
At the same time, there is evidence of recovering fuel use. British airline easyJet plans to restart some flights on June 15, pointing to higher jet fuel demand.
Physical crude markets, at historic lows just weeks ago, are also rising.
“It is now abundantly clear that the market is tightening and crude prices are rebounding as demand returns,” said analysts at JBC Energy.
The Organization of the Petroleum Exporting Countries, Russia and other allies, known as OPEC+, agreed to cut supply by a record 9.7 million barrels per day (bpd) from May 1 to support the market.
So far in May, OPEC+ has cut oil exports by about 6 million bpd, according to companies that track the flows, suggesting a strong start in complying with the deal. OPEC says the market has responded well.