Weeks after plunging to less than zero, oil prices are rocketing higher.
Last checked, crude now trades at $33.43. And the worst may be behind us.
Helping, Saudi Arabia and Russia ended its price war, and have stopped flooding the market with unwanted supply. The two are now part of the deepest oil production cuts on record. Better, U.S. shale companies have shut down unprofitable wells.
And, according to Mohammad Barkindo, secretary-general of OPEC, “as much as 17 million barrels a day will have been taken off the market by next month,” as noted by Bloomberg.
Better, “Concerns about the planet running out of places to store crude and product have evaporated,” said Judith Dwarkin, chief economist at RS Energy Group. “Near-month prices in the physical market are factoring this in as well as for the outlook ahead.”
Plus, the global economy is just beginning to reopen, which is seeing glut evaporate. With global production cuts and recovery expectations increasing, oil prices could run higher.
And there’s news from Energy Intelligence, “The OPEC-plus alliance may extend May and June oil production cuts of almost 10 million barrels per day through the end of this year, an OPEC delegate tells Energy Intelligence. The delegate said a proposal to that effect would be discussed at the next OPEC -plus video-link meeting in June.”
If we see further progress, crude could easily recover back to $50, near-term.