U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher on Tuesday, supported by growing confidence in OPEC and U.S. producer ability to trim production and reduce the global supply glut. Meanwhile fuel demand continues to pick up with more cars back on the road and industries reopening as coronavirus lockdowns ease.
The world’s major producers, including Saudi Arabia and Russia, agreed in April to cut their collective output by nearly 10 million bpd for May and June. OPEC+ countries are set to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
Meanwhile in the United States, U.S. producers continued to make moves to lower output. Data from energy services firm Baker Hughes showed the U.S. rig count hit a record low of 318 in the week to May 22, also indicating lower output in the future.
On the demand side, Russia’s ministry on Monday quoted minister Alexander Novak as saying a rise in fuel demand should help cut a global surplus of about 7 million to 12 million bpd by June or July.
Russia Leapfrogs Saudi Arabia as China’s Top Crude Oil Supplier in April
Russia overtook Saudi Arabia as China’s top crude oil supplier in April, customs data showed, with imports rising 18% from the same month a year earlier as refiners snapped up cheap raw materials amid a price war between the two producers, Reuters reported.
Russian shipments reached 7.2 million tonnes last month, equivalent to 1.75 million barrels per day (bpd), according to data from the General Administration of Customs released on Tuesday. That compares with 1.49 million bpd in April 2019 and 1.66 million bpd in March.
Supplies from Saudi Arabia fell to 1.26 million bpd, down 1.53 million bpd in April 2019 and 1.7 million bpd in March.
China’s total crude oil imports in April came in at 9.84 million bpd, up from 9.68 million bpd in March, but well below 10.64 million bpd in April last year, according to data released earlier this month.
Still, imports during the first four months of the year were up 1.7% on a year earlier as Chinese oil refineries take advantage of slumping oil prices.
The early price action suggests the market is getting close to overbought, which is a technical issue. Traders are starting to see the upside potential of the market as economies begin to open, however, if they decide that value is important then we could start to see some profit-taking with the hopes of a break into a more favorable price area.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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