Reduced oversupply fears .. Brent at $ 36

Oil prices advanced today, Thursday, as withdrawals from US crude oil inventories and production cuts by major producers eased concerns about oversupply, but continued concerns about the global economic consequences of the Covid-19 pandemic are holding back gains.

Brent crude futures for July delivery rose 33 cents, or 0.9%, to $ 35.90 a barrel by 03:44 GMT, to rise for the second day.

US West Texas Intermediate crude for delivery in July rose 20 cents, or 0.6%, to $ 33.43 a barrel, extending its gains for the sixth straight session.

The US Energy Information Administration data showed that US crude oil inventories fell five million barrels last week, compared to expectations in a Reuters poll of an increase of 1.2 million barrels, while inventories in Cushing’s Oklahoma delivery center fell 5.6 million barrels.

Prices recently received support thanks to shipping data that showed the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, in what is known as the OPEC + group, were complying with their pledge to cut 9.7 million barrels per day.

“The rally in crude futures is beginning to approach levels where US rock production declines to slow and possibly return to rise as low-cost producers try to generate revenue,” said a report from Jim Ritterbusch, president of Ritterbusch & Co. in Galena, Illinois.

Meanwhile, there is evidence of recovering fuel consumption.

The major US airline, Air Canada, said on Tuesday that ticket cancellations had slowed and that some tracks were improving bookings, although overall demand was still weak, executives said.

The OPEC Secretary General said that the organization itself is encouraged by the high prices and the strong commitment to production pledges, although sources said that the group does not rule out taking further steps to support the market.

Indeed, the current crude market is indicating a rapid shift from a massive supply surplus at the height of the public isolation measures linked to the Corona virus in April towards an expected supply shortage in the second half of the year.

But concerns about the lasting economic impact of the pandemic, particularly in the United States, the world’s largest oil consumer, are putting downward pressure on prices.

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