Oil prices have edged up as OPEC+ Group started output cuts as agreed to counter a slump in fuel demand triggered by the coronavirus (Covid-19) pandemic.
According to Reuters, West Texas Intermediate (WTI) futures were trading at $19.54 a barrel, a 25% gain from the previous session.
Meanwhile, Brent crude LCOc1 futures rose $0.34 to $26.82 a barrel by 0318 GMT.
The record supply cut production of approximately ten million bpd cuts agreed by the OPEC+ Group has officially started from today.
Prices further gained some support after data released by industry group US Energy Information Administration (EIA) highlighted an increase in US crude stocks to 527.6 million barrels in the week that ended on 24 April, by nine million barrels which is less than expected.
Rystad Energy said that the imbalance between oil supply and demand is set to be halved to 13.6 million barrels per day (bpd) this month. Next month, it is expected to further drop to 6.1 million bpd.
Rystad oil market analyst Louise Dickson was quoted by the news agency as saying: “While this may seem like a drastic improvement from April, the oil market is not magically fixed.
“The storage issue still looms large,” she said, referring to storage space around the world rapidly dwindling.”
A Reuters poll revealed that prices are likely to fall further this year even as countries started easing restrictions that were in place to limit the spread of the virus, and the output cuts by major producers will not fix the supply glut issue.