Oil Set for Longest Rally in Nine Months Amid Falling Output - Bloomberg:
Oil is headed for the longest run of daily gains in more than nine months as production cuts start to whittle down a supply glut and more economies ease their coronavirus lockdowns.
Futures in New York rose for a fifth day, gaining more than 20%, while Brent topped $30 dollars a barrel for the first time since April 15. As OPEC+ producers begin to cut output as part of an historic supply-curb agreement, U.S. explorers are shutting in production in the country’s biggest shale fields. Diamondback Energy Inc., Parsley Energy Inc. and Centennial Resource Development Inc. on Monday became the latest Permian Basin producer to say they were dialing back.
“The primary issue is that there is less fear of a storage crisis, and there is also an anticipation that production is going to start to fall pretty quickly,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC.
The American crude benchmark has more than doubled from an intraday low near $10 a barrel last week. The discount on crude for June delivery relative to July, a structure known as contango, tightened to its narrowest in more than a month, indicating that concerns about oversupply may be easing.
Oil is headed for the longest run of daily gains in more than nine months as production cuts start to whittle down a supply glut and more economies ease their coronavirus lockdowns.
Futures in New York rose for a fifth day, gaining more than 20%, while Brent topped $30 dollars a barrel for the first time since April 15. As OPEC+ producers begin to cut output as part of an historic supply-curb agreement, U.S. explorers are shutting in production in the country’s biggest shale fields. Diamondback Energy Inc., Parsley Energy Inc. and Centennial Resource Development Inc. on Monday became the latest Permian Basin producer to say they were dialing back.
“The primary issue is that there is less fear of a storage crisis, and there is also an anticipation that production is going to start to fall pretty quickly,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC.
The American crude benchmark has more than doubled from an intraday low near $10 a barrel last week. The discount on crude for June delivery relative to July, a structure known as contango, tightened to its narrowest in more than a month, indicating that concerns about oversupply may be easing.
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