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Crude Oil Moves Higher; Norway Agrees to Cut Production

CommoditiesApr 30, 2020 10:22AM ET
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© Reuters.

By Peter Nurse 

Investing.com - Oil prices pushed higher Thursday, rebounding amid hopes moves to correct the oversupplied nature of the market may be having some effect.

AT 10:15 AM ET (1415 GMT), U.S. crude futures traded 17% higher at $17.68 a barrel, while the international benchmark Brent contract rose 10% to $26.68.

Global oil demand is poised to slump by 9 million barrels a day, or about 9%, this year to the lowest level since 2012, the IEA said in its Global Energy Review, as transportation came to a virtual halt on the back of the coronavirus outbreak.

Still, as bad as that estimate sounds, it’s inline with the agency’s forecast in mid-April, suggesting the situation hadn’t deteriorated.

Adding to the positive tone was the news that Norway, western Europe’s biggest oil producer, joined international efforts to curb supply for the first time in almost two decades.

Norway will cut production by 250,000 barrels a day in June and 134,000 barrels in the second half of the year, the Petroleum and Energy Ministry said late on Wednesday.

This followed U.S. crude inventories growing by 9 million barrels last week to 527.6 million barrels, according to U.S. Energy Information Administration data, well below the 10.6 million-barrel rise analysts had expected.

"If we see a continuation of this trend in the coming weeks, it could suggest the worst might be behind the oil market," ING's head of commodities strategy Warren Patterson said.

That said, Thursday saw more illustrations of the damage the low prices have done to the major oil producers.

Royal Dutch Shell (LON:RDSa) cut its dividend for the first time since the Second World War, while ConocoPhillips (NYSE:COP) has decided to nearly double its production cuts to a net 420,000 barrels a day in June, from 230,000 barrels a day in May.

Oil prices are experiencing a historic slump. The international benchmark Brent crude remains near the lowest since 2002, trading just above $20 a barrel in London, while U.S. futures fell briefly below zero last week.

Crude Oil Moves Higher; Norway Agrees to Cut Production
 

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Comments (4)
David Bennett
David Bennett Apr 30, 2020 12:49PM ET
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Production must come down and stay down in the US even when demand rises again. if you can't make a profit at $45.00 a bbl, probably not going to make a profit at $17.00. And if your cost are cut as much as possible for the multimillion dollar horizontal wells, and still can't make a profit, we need to go back to the 250 bbl a day IP, $850,000 vertical well. This will cut US production back to the late 90s at 3 or 4 million bbls a day and make a profit at $20.00 bbl.
Nick Deromeo
Nick Deromeo Apr 30, 2020 11:42AM ET
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Oil is the most manipulated commodity in the market. No one is buying it, but it just goes up in price lol. Highest unemployment in decades and stocks show movement like they're winning.
Mohamed El Saiid
Mohamed El Saiid Apr 30, 2020 11:02AM ET
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Brent is going up to 28.5$, wti to 18.5$. Actually if this month and week close near these levels it will give us another one signal about reserving the downward trend. Sooner or later brent will come to *******the crucial question is when to begin buying
Jose Marquez
Jose Marquez Apr 30, 2020 10:56AM ET
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250,000 ?? there is an excess of 100000 even with OPEC cuts !!!
 
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