Oil set for a second weekly gain on demand hopes, output shut-ins

US West Texas Intermediate (WTI) crude gained 59 cents, or 2.5 per cent, to $24.14 a barrel.

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Brent crude was up 62 cents, or 2.1 per cent, to $30.08 a barrel by 11:10 a.m. ET (1510 GMT).
NEW YORK: Oil prices rose about 2 per cent on Friday and were on course for a second consecutive week of gains as US producers rapidly shut crude production and more states moved ahead with plans to relax lockdowns intended to prevent the spread of the worst public health crisis in a generation.

Brent crude was up 62 cents, or 2.1 per cent, to $30.08 a barrel by 11:10 a.m. ET (1510 GMT). US West Texas Intermediate (WTI) crude gained 59 cents, or 2.5 per cent, to $24.14 a barrel.

Both contracts are heading for a second week of gains, with Brent advancing over 14 per cent this week and WTI up more than 22 per cent.

"This advance of the past couple of weeks has been a bit suspect given the fact that coronavirus cases continue to increase and the US crude surplus is maintaining a steep up trend where a record US stock level is likely to be achieved in next week's EIA report," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.

The US Energy Information Administration's weekly report on Wednesday showed 15 weeks of consecutive rises in crude stocks although the rate of growth in inventories has slowed since a record build of 19 million barrels in early April.

However, North American oil companies have shut production faster than analysts expected and are on track to withdraw about 1.7 million barrels per day (bpd) of output by the end of June.

The number of oil and gas rigs operating in the United States is expected to hit an all-time low this week - reflecting data going back 80 years. Data for this week is due after 1 p.m. (1700 GMT).

These commercially-driven cuts are in addition to those by Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group know as OPEC+, which began implementing a deal to curb a record 9.7 million bpd from the start of May.

"The market remains very oversupplied, but OPEC+ cuts and voluntary curtailments are helping and the modest beginnings of demand recovery could be imminent as lockdowns begin to ease," said Jefferies equity analyst Jason Gammel.

Australia on Friday became the latest country to plan an easing of lockdowns, while France, parts of the United States and countries such as Pakistan are also planning to ease restrictions.

Market participants are watching as the economic crisis unfolding in the United States affects oil demand in the coming months. The world's biggest economy lost a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression.

"Price-wise, we still expect to see some mild (if not wild) price swings as the traders get bullish on shut-ins and then again bearish on the stock builds that continue to pile up," said Rystad Energy oil markets analyst Louise Dickson.




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