Crude oil prices resume weekly gains as demand picks up

Following fears of a resurgence of the coronavirus pandemic in China and the United States coupled with uncertainty over demand recovery, the crude oil prices slumped last week to less than $39 per barrel ending weeks of a gradual rebound in prices. The Brent crude got to about $43 per barrel, the highest in about 3 months.

However, oil prices appear set to resume a run of weekly gains on signs that demand is picking up as the global easing of lockdown and restrictions is implemented despite many countries struggling to bring the coronavirus pandemic under control.

The 2 largest commodity trading firms in the world, Vitol Group, and Trafigura had earlier said that the global oil demand is recovering badly from its lowest level in April. However, a potential resurgence of the coronavirus disease in China and the US is affecting the long term outlook.

The Brent crude which sold for about $38 per barrel is now selling for $41.76 per barrel, the American WTI has recovered to $39.12, going up by 8% since June 12.

Oil prices are resuming its upward trend after last week’s drop in prices which was the first since April, as the demand recovery supports the effort to reduce supply. The reduction in supply glut is aided by the extension of the output cuts by OPEC+ and some top oil-producing countries. OPEC+ had emerged from its Joint Ministerial Monitoring Committee on Thursday and expressed confidence that all members will comply with their agreed output cuts.

The easing of lockdown in Europe, some parts of Asia, and even Africa has seen the demand improve as businesses are opening up.



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