Oil prices on Monday jumped to their highest in over two months on positive early results on a potential coronavirus vaccine, optimism about a resumption in economic activity and signs producers were following through on planned output reductions, Reuters informs.
Brent LCOc1 futures for July delivery rose $2.31, or 7.1%, to $34.81 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 rose $2.39, or 8.1%, to $31.82.
That was the highest settles for Brent and WTI since March 11, just a few days after prices started to collapse following the failure of a production cut agreement between the Organization of the Petroleum Exporting Countries (OPEC) and Russia, a group known as OPEC+.
“It has taken WTI over two months to basically clean up the wreckage from the March (OPEC+) meeting,” said Bob Yawger, director of energy futures at Mizuho in New York.
In the first half of May, OPEC+ has cut oil exports sharply, companies that track the shipments said, suggesting a strong start in complying with a new production cut agreement.
OPEC+ agreed to cut supply by a record 9.7 million barrels per day (bpd) from May 1. [L8N2D056I] Saudi Arabia, the world’s top exporter, announced last week it would cut an additional 1 million barrels per day in June.
The rally in the June WTI CLM0 contract, which will expire on Tuesday, suggested last month’s historic plunge to negative-$40 a barrel would not be repeated.
July WTI CLN0 was the more actively traded U.S. futures contract with volumes in the second-month contract outpacing the front-month for several days now. The July contract closed up 7.2% to $31.65.
In the United States, the phased reopening of business and social life gained traction with more Americans emerging from coronavirus lockdowns and stock markets rising on early test results of a potential vaccine.