Oil crosses $35 as demand rises

Oil prices rose on Tuesday as fuel demand picks up as coronavirus lockdowns ease across the globe.

Brent crude futures rose by 0.8per cent at $35.82 per barrel. West Texas Intermediate (WTI) crude futures gained 2.3per cent, to trade at $34.02.

Nigeria’s Bonga crude oil export terminal will close for routine maintenance, a port source said yesterday.

The source said Bonga operator Royal Dutch Shell would shut the floating production storage and offloading unit (FPSO) for two weeks of works. Shell did not immediately comment on the closure.

Bonga was scheduled to load four cargoes in June, or 127,000 barrels per day (bpd), up slightly from May at 123,000 bpd.

Nigeria, whose millions of barrels of unsold crude were the epitome of the oil market’s glut in recent weeks, lifted the selling price for its supplies in June from record lows.

Algeria also hiked its official prices by almost $3 a barrel. The moves by the two Organisation of Petroleum Exporting Countries (OPEC) nations show increasing confidence that they can sell their barrels at costlier levels, providing them some respite after being hammered by COVID-19 outbreak.

Oil has surged more than 80per cent this month as demand has picked up and output cuts have started to chip away at a massive oversupply.

That has also led to a steady flattening in the futures curve — a signal market supplies are growing tighter. Russia, a key member of the OPEC+ alliance that has pledged record output cuts, expects the market to balance in June or July.

“The current recovery in oil prices has primarily been driven by supply considerations. The world’s swing producers, the OPEC+ group, is more than living up to expectations to adhere to the 9.7 million barrels per day (bpd), or perhaps even bigger, self-imposed and co-ordinated output restraint. As lockdown restrictions are being eased, the demand side of the equation also provides support,” an oil broker PVM’s Tamas Varga said.