By Peter Nurse
Investing.com - Oil prices pushed higher Tuesday, for the fourth straight day, as producers cut output, both by design and through market forces, while demand picks up.
At 8:50 AM ET (1250 GMT), U.S. crude futures traded 1.1% higher at $32.01 a barrel, after hitting its highest since March 16. The international benchmark Brent contract rose 0.6% to $35.02, after touching its highest since April 9.
Saudi Arabia, Russia and other members of the alliance known as OPEC+ have started this month implementing the largest ever coordinated production cuts, to the tune of 9.7 million barrels a day. The early signs indicate that the main producers have been complying with the agreement.
On top of this, U.S. crude output from seven major shale formations is expected to fall by a record 197,000 barrels per day in June to 7.822 million barrels per day, the U.S. Energy Information Administration said in a monthly report on Monday. That would be the lowest since August 2018.
Later Tuesday, the American Petroleum Institute will release its measure of U.S. oil inventories. A report from private consultancy Seevol on Monday suggested that stocks at the U.S. national hub of Cushing, Oklahoma, had fallen by 5.49 million barrels last week.
At the same time, confidence is growing that demand is rising as many countries reopen their economies, lifting restrictions imposed at the height of the coronavirus crisis.
For example, Southwest Airlines (NYSE:LUV) recorded, via a SEC filing, a load factor of 8% in April, and estimated a jump to 25%-30% in May and then 35%-45% in June.
The June WTI contract expires later Tuesday, but the current circumstances are very different from those that resulted in the historic plunge below zero a month ago on the eve of the May contract's expiry, and such turmoil is not likely to be repeated.