Oil prices gain with OPEC+ holding the line on supply cuts

June 19, 2020: Oil prices rose more than 1% on Friday, adding to gains in the previous session after OPEC producers and allies promised to meet commitments on cutting supply and two major oil traders said demand was recovering well.

Brent crude futures rose 61 cents, or 1.5%, to $42.12 a barrel by 0639 GMT, the highest in more than a week. U.S. West Texas Intermediate (WTI) crude futures climbed 60 cents, or 1.5%, to $39.44 a barrel. Both contracts rose about 2% on Thursday and are heading for weekly gains of nearly 9%.

Plans by Iraq and Kazakhstan to make up for overproduction in May on their supply cut commitments supported the market. The promises came out of a meeting by a panel monitoring compliance by the Organization of Petroleum Exporting Countries and its allies, a grouping called OPEC+.

Prices are showing "solidity at these levels, as oil markets ignore the concerns rolling across other asset classes at the moment," said Jeffrey Halley, senior market analyst at OANDA.

"That suggests that prices are supported by physical buyers (which) is welcome as it implies that physical demand across the globe is recovering, with its implications for economic growth,” he added.

Brent moved into backwardation on Thursday for the first time since early March, with the August contract rising to 9 cents above September on Friday.

Reuters