Oil up on improving US demand signs

Gulf oil producers to maintain output OPEC target


Oil prices rose nearly 2 percent on Thursday on signs of improving demand in the United States, the world’s biggest crude consumer, and as OPEC and other producers finally agreed to a date for a meeting to discuss output cuts. Brent crude futures rose $1.13, or 1.8 percent, to $62.95 a barrel at 0611 GMT. They dropped 0.5 percent on Wednesday. US West Texas Intermediate (WTI) crude futures were up 90 cents, or 1.7 percent, at $54.66 a barrel. WTI fell 0.26 percent in the previous session. It’s a very mixed bag of factors. In the US (oil) demand is likely to be picking up into summer and the OPEC meeting looks like there’s going to be an extension or even more cuts is a possibility,”said Phin Zeibell, senior economist at National Australia Bank. After swelling to near two-year highs, US crude stocks fell by 3.1 million barrels last week, compared with analyst expectations for a draw of 1.1 million barrels, the Energy Information Administration (EIA) said. Market bears are not paying any heed to the bullish signals in Brent crude. Brent prices had a knee-jerk reaction for a few hours to the two attacks on oil tankers in the Gulf of Oman and, earlier, off the Fujairah coast. Overall, Brent has been in a downward trajectory due to demand concerns from the escalating trade tensions between the US and other countries. Brent crude prices gained $2-3 per barrel on the day of the attacks, but shed 13 per cent since the first one took place on May 12. On Thursday, prices jumped 3.2 per cent to a high of $63.88 per barrel after Iran shot down a US military drone. Gulf OPEC producers will keep their July oil production within their OPEC target despite the current global supply cut pact expiring at end of June, OPEC sources said on Thursday, a signal that the Gulf exporters are reluctant to boost supply. Saudi Arabia, the top global oil exporter’s crude output in June will be around the same level of its May production, and its July output will remain within its obligation under the OPEC-led supply cut deal, the sources said. Saudi oil output in May was 9.67 million bpd, according to OPEC figures. Riyadh has been pumping below its 10.3 million bpd target under the OPEC pact for the past months. — VoM

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