U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday and in a position to close higher for the week after OPEC producers and allies promised to meet supply cuts and signs of demand, hit the coronavirus crisis, recovering.
OPEC+ Laggards Pledge Better Compliance
Iraq and Kazakhstan, during a meeting of an OPEC+ panel on Thursday, pledged to comply better with oil cuts, sources said. This means curbs by the Organization of Petroleum Exporting Countries and allies, known as OPEC+, could deepen in July.
The strong comeback in the crude oil market after weakness earlier in the week indicates that investors believe that OPEC+ remains in control of the oil supply. This is helping to reduce the fear of another major oversupply situation that drove prices sharply lower from March to May. Furthermore, bullish investors are also increasing bets that OPEC+ compliance will improve in the coming months.
Brent Moves into Backwardation
In another bullish development, Brent crude oil on Thursday moved into backwardation, where oil for immediate delivery costs more than supply later, for the first time since March 1.
A premium for oil for immediate delivery usually indicates tightening supply and encourages storage to be drawn out.
US Refiners Aim to Lock in Crude Volumes after Getting Burned by Shut-ins: Reuters’ Sources
U.S. refiners and other buyers of crude oil are reworking some…