Global oil prices on the rise as cuts kick in following KSA push
All pre-virus demand may return by H2 of 2021 Nine deaths, 2,307 new cases in Saudi Arabia
Global oil prices ended the week on a high after further big commitments to rebalancing crude markets in the face of the pandemicdriven fall in demand.
Brent crude, the global benchmark, stayed firm above the $30 mark, ending the day just short of $32 in European trading — its third consecutive daily rise.
West Texas International (WTI), the US standard, jumped 4.4 percent to just short of $30, easing fears of another plunge into negative territory when the contract for June delivery expires next week.
The sustained recovery in oil prices comes after a week in which producers committed to even bigger cuts than the record 9.7 million barrels per day (bpd) reduction agreed in the revived OPEC+ agreement between producers led by Saudi Arabia and
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Russia. The Kingdom pledged an extra 1 million bpd of voluntary cuts last week, followed by smaller reductions from Kuwait and the UAE. Saudi Arabia’s cut of more than 4 million bpd is the largest component of that reduction, followed by Russia.
Some experts believe the recovery could be faster than predicted. Roger Diwan, vice president of financial services at US energy consultancy IHS Markit, said that by the second half of next year demand could be almost completely made up.
“It may be hard to comprehend now. But barring a second wave of the pandemic, nearly all pre-COVID demand could return by the second half of 2021. If that transpires, it could even lead to a market squeeze in the medium term as supply destruction hinders the ability of supply to keep up with recovering demand.
“But make no mistake, the road to oil price recovery will likely be choppy and plagued with stopand-go rallies and selling cycles until some level of certainty is restored,” he added.
Saudi Arabia, as a global “swing producer,” will gain from any upturn. The Kingdom’s energy ministry last week announced the discovery of two new oil fields, with more details to be released once geological surveys are complete.
President Donald Trump said the US was working with other countries to develop a vaccine at an accelerated pace and expressed hope that it would be in place before the year-end.
Aid workers in Bangladesh raced to stop the coronavirus spreading through the world’s largest refugee settlement after the first cases were confirmed. The UN said the 850,000 Rohingya who occupy the densely populated camps in Bangladesh were among the most vulnerable to the virus, which has spread rapidly around the globe.
Saudi Arabia has tested 500,000 people using polymerase chain reaction testing since the virus outbreak. The curve had been expected to rise between 10,000 to 200,000 cases by April. The preventive measures have helped keep that curve to a minimum. On Friday the Kingdom recorded 2,307 new cases — 41 percent of them Saudis and the rest expats — taking the total number to 49,176 people. There are now 27,015 active cases, 167 of which are serious. Nine new fatalities have raised the Kingdom’s death toll to 292.
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