Oil Holds Above $35 on Demand Hopes as OPEC Mulls Cut Extension

Oil Holds Above $35 on Demand Hopes as OPEC Mulls Cut Extension thumbnail

© Bloomberg. Oil storage tanks in Cushing, Oklahoma. Photographer: Daniel Acker/Bloomberg

    (Bloomberg) -- Oil nudged higher in Asia after U.S. manufacturing data offered grounds for optimism about a demand recovery and as the market awaited news on whether OPEC would move to extend the duration of output cuts.

Futures in New York rose 0.6%, after easing 0.1% on Monday. U.S. manufacturing activity rose in May for the first time in four months, suggesting stabilization after a pandemic-driven plunge. The survey helped Wall Street stocks eke out a modest gain and lifted sentiment broadly across risk assets.
OPEC and its allies are preparing to discuss maintaining record output curbs for an extra one to three months. But a proposal to bring forward the group’s next meeting by several days to Thursday was still being debated two days after it was first floated.
Without an extension, the existing caps begin to wind down next month. Any changes to the existing deal will hinge on negotiations between Moscow and Riyadh. As of last week, Russia’s position was that it wanted to start easing the cuts next month.
The U.S. Oil Fund ETF began its monthly roll of futures contracts on Monday. The fund plans to sell its July holdings and buy more November and January futures over the next 10 trading sessions.
Road fuel consumption is slowly recovering as coronavirus travel restrictions are lifted at different paces around the globe, with Chinese refiners leading the charge in processing more crude. The restoration of airline traffic is clearly taking much longer though, according to Bloomberg’s weekly oil demand monitor.
©2020 Bloomberg L.P.

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