Oil futures rose Friday, with the U.S. benchmark on track for a weekly gain as investors turn their attention toward production cuts by major oil producers and demand shows early signs of recovery with business lockdowns globally beginning to be lifted.
West Texas Intermediate crude for July delivery, the most active contract, was up 41 cents, or 1.5%, at $28.29 a barrel on the New York Mercantile Exchange, on track for a 14.4% weekly advance. July Brent crude was up 68 cents, or 2.2%, at $31.81 a barrel on ICE Europe, on track for a 2.8% weekly rise.
“The market focus is increasingly shifting to supply as many OPEC+ members meet or exceed their targets,” said Jason Gammel, analyst at Jefferies, in a note.
Saudi Arabia will cut an extra 1 million barrels a day in June, with the United Arab Emirates and Kuwait also contributing more than their targets, and Russian production is nearing its target as well, he said.
“The deepest cuts extend only through June, but the group could agree an extension when they meet on June 10. Meanwhile, the U.S. rig count has collapsed and, at the current cadence, we estimate U.S. production will be down 2.5 million barrels a day exit to exit in 2020,” Gammel wrote.
Data on the U.S. weekly rig count from Baker Hughes is due later Friday.
Meanwhile, a fallback in U.S. crude inventories reported earlier this week, including a drop in stocks at the Nymex futures contract delivery hub in Cushing, Oklahoma, have helped ease worries of another plunge into negative price territory as the June contract nears expiration, analysts said. A lack of storage was blamed for a plunge by the May contract into negative territory on the eve of its expiration last month.