Brent crude hit $42 per barrel on Friday, June 19 as traders shrugged off concerns about rising coronavirus infections, with the US West Texas Intermediate crude hitting $40 per barrel in early trading on Friday, a three-month high.
At the close of transactions yesterday, the Brent futures gained 68 cents or 1.64 percent to trade at $42.19 per barrel, while the WTI appreciated by 88 cents or 2.32 percent to settle at $39.75 per barrel.
There are continued upturns in COVID-19 cases throughout major economies, bringing about worries that activities might be shut down again to contain further spread.
More than 8.38 million people worldwide have been infected with the novel coronavirus. Earlier in the week, close to 400 workers at an abattoir in northern Germany tested positive for the virus, and China on Friday reported 32 new cases of the virus.
But this did not seem to depress traders as prices continued a rise from the previous session lifted by the intentions of the Organisation of the Petroleum Exporting Countries (OPEC) to tightens its output cut compliance.
The cartel and its allies known as OPEC+ as well as the Joint Ministerial Monitoring Committee (JMMC) met recently on the issue and this was welcomed the oil markets. The reason for the gathering was to ensure that certain countries make up for failing to fully meet their output cut targets last month.
Two of these laggards, Kazakhstan and Iraq, have pledged to improve their compliance rates in relation to the huge production cut, while Nigeria, Angola, Gabon and Azerbaijan were given till Monday to submit a plan of how they intend to make up for the shortfall.
With this, these countries, including Nigeria, will increase their reduction in oil supply in July, helping to fix the supply side of the market, a welcome news.
Oil supplies last May plunged by nearly 12 million barrels per day due to the OPEC+ group reducing their output by 9.4 million barrels daily – 89 percent of it planned target – and it could go higher in future months.
However, crude stockpiles in the US, the world’s largest producer hit another record high this week, but fuel inventories fell, a good sign.
The US oil and gas rig count, an early indicator of future output, fell to a record low for a seventh week in a row, dropping by 13 to 266 this week.
