Oil rises 5% in second weekly gain on output cuts, demand hopes

Oil rises 5% in second weekly gain on output cuts, demand hopes

Oil rises 5% in second weekly gain on output cuts, demand hopes

Crude prices snapped their five-day winning streak on Wednesday as US inventories swelled for a 15th consecutive week.

American benchmark West Texas Intermediate (WTI) was at $24.98 a barrel at the same for a 6.07% gain after closing the previous day at $23.55 per barrel.

Since the beginning of this week Brent rose by about 13%, WTI - by 21%.

Crude oil rallies again (CL1:COM) and is on track for its best week in history, supported by bullish factors including US companies cutting production, Saudi Arabia raising its official oil selling price and gasoline demand improving as economies around the world reopen.

"Although the growth of stocks of oil and oil products remains a risk for market, key trends such as supply-side and demand-side have begun to improve", says analyst at Schneider Electric, Robbie Fraser, who was quoted by MarketWatch. "I think there was some profit taking", said John Kilduff, partner at Again Capital LLC in NY.

US crude inventories USOILC=ECI were up for a 15th straight week last week, rising by 4.6 million barrels, the Energy Information Administration said on Wednesday. Overall exports from China also rose against expectations of a sharp drop.

USA crude inventories at the Cushing storage hub in Oklahoma rose by about 407,000 barrels in the week through May 5, traders said citing Genscape data.

Meanwhile, despite the horrific disclosure that the USA lost 20.5 million jobs in April according to the Bureau of Labor, the continued global reopening of businesses caused the Dow Jones, S&P 500 and the Nasdaq Composite to rally on Friday, as did markets across Asia and in Europe, reflective of the determination of the business sector to put unemployment in its rear view mirror. Last week, the energy consultant forecast demand next year would average 88.8 million bpd.

Oil prices surged Thursday after Chinese data showed a rebound in crude imports. Imports climbed to 10.42 million barrels day (bpd) in April from 9.68 million bpd in March, according to Reuters calculations based on customs data for the first four months of 2020.

This week's rally has also been supported by a deal agreed between top producers to reduce output by nearly 10 million barrels a day, which came into effect on May 1.

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