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Oil prices have inched higher as fall in the US crude stocks and output cuts by OPEC producers ease supply glut fears.
Brent crude futures for July delivery rose $0.33 at $36.08 per barrel, while US West Texas Intermediate (WTI) crude futures increased $0.20 at $33.69 a barrel, Reuters reported.
Lingering concerns over the economic disruption from the coronavirus outbreak, however, have kept a lid on gains.
Data released by industry group Energy Information Administration (EIA) reported a fall in the US crude inventories by five million barrels in the week that ended on 15 May.
Meanwhile, US crude inventories at the Cushing storage hub in Oklahoma dropped by 5.6 million barrels.
The news agency quoted Capital Economics as saying in a note: “While signs that WTI storage pressures are abating is positive for prices, the latest report shows that the fall in stocks owes more to supply factors than growing product demand.”
Prices have been supported by shipping data showing that the OPEC+ Group are complying with their committed output cuts of approximately ten million bpd. This officially started on 1 May.
In reality, physical crude markets are hinting a quick shift from an extensive over-supply as a result of the coronavirus lockdowns last month towards an expected under-supply in the second half this year.
According to Reuters, Minutes from the US central bank’s policy meeting that took place from 28-29 April showed that Federal Reserve policymakers repeated a vow to take all the necessary steps to prop up the country’s economy.