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Iraq and Kazakhstan, during a meeting of an OPEC+ panel on
Thursday, pledged to comply better with oil cuts, sources said.
This means curbs by the Organization of Petroleum Exporting
Countries and allies, known as OPEC+, could deepen in July.
"There is enthusiasm in the market that oil supply is still
under control," said Paola Rodriguez Masiu, analyst at Rystad
Energy. "A positive OPEC+ meeting does that and yesterday's
session helped renew confidence."
Brent crude <LCOc1> was up 75 cents, or 1.8%, at $42.26 by 1117
GMT after hitting $42.89, its highest since June 8. U.S. West
Texas Intermediate (WTI) crude <CLc1> climbed 96 cents, or 2.5%,
to $39.80.
"The key takeaway is that OPEC+ compliance will improve in the
coming months," said Stephen Brennock of broker PVM.
Both contracts rose about 2% on Thursday and are heading for
weekly gains of more than 9%.
Brent has more than doubled since hitting a 21-year low in
April, helped by record OPEC+ supply cuts of 9.7 million barrels
per day (bpd), or 10% of world demand, and an easing of
government lockdowns imposed to control the coronavirus.
Fuel demand in Europe is staging a gradual recovery after the
height of the lockdowns in April but remains well below normal,
data from several countries shows.
In a further sign of market recovery, Brent on Thursday moved
into backwardation, where oil for immediate delivery costs more
than supply later, for the first time since March. <LCOc1-LCOc2>
A premium for oil for immediate delivery usually indicates
tightening supply and encourages storage to be drawn down.
U.S. crude stocks hit another record this week, but fuel
inventories fell. [EIA/S]
(Additional reporting by Sonali Paul and Aaron Sheldrick;
editing by Jason Neely)
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