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James Hyerczyk
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WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher at the mid-session on Thursday after posting a choppy, two-sided trade earlier in the session. Although traders are leaning toward the upside this week, gains have been capped by rising crude oil supplies and a surge in new coronavirus cases. Meanwhile, a slight increase in demand for refinery products is helping to underpin prices.

At 16:26 GMT, August WTI crude oil is trading $38.96, up $0.75 or +1.99% and August Brent crude oil is at $41.42, up $0.71 or +1.74%.

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Rising Global Demand Concerns

Helping to cap gains this week are renewed worries about fuel demand after a surge in coronavirus cases in Beijing and the United States threatened to lockdown portions of the economy. In China, for example, the government shut down schools and cancelled flights. In the U.S., government officials in Texas, Florida and California are reconsidering imposing restrictions at bars and restaurants.

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Mixed EIA Report Raises Hopes for Bulls

This week’s Energy Information Administration (EIA) government inventories report offered a ray of sunshine for the bulls after gasoline and distillate inventories fell unexpectedly. Additionally, crude oil output is now down at 10.5 million barrels per day as oil producers continued to slash output.

OPEC to Hold Online Meeting

OPEC and its allies held an online meeting on Thursday to discuss the future of a record 9.7 million barrels per day (bpd) output cut.

Thursday’s discussion was unlikely to recommend an extension of record cuts into August, sources said. OPEC+ compliance with production cut commitments in May was 87%, two OPEC+ sources said on Wednesday.

Saudi Arabia Crude Exports Rose to 10.237 Million Barrels per Day in April – JODI

Saudi Arabia’s crude oil exports in April rose to 10.237 million barrels per day (bpd) from 7.391 million bpd in March, official data showed on Thursday.

In April, on average the 13-member Organization of the Petroleum Exporting Countries pumped 30.25 million barrels per day (bpd), according to a Reuters survey published that month, up 1.61 million bpd from a revised March figure.

Short-Term Outlook

It looks as if traders are starting to price in the real possibility that a rise in COVID-19 cases will not be as bad as the first wave of infections. The price action suggests that trader don’t believe there will be wide spread shutdowns and that the economy will just ride out this phase.

The key will be the gasoline and distillate numbers. If inventories continue to fall then this will indicate that people are driving, truckers are on the road and airlines are reopening routes.

For a look at all of today’s economic events, check out our economic calendar.

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