Oil futures finished an amazing month on Thursday with a 25% gain for US West Texas Intermediate crude while Brent futures were up half that rate as production cuts emerged to ease some fears about too much oil and not enough storage.
The market found support from the news that major oil companies have announced voluntary crude production cuts and amid signs that storage space for crude won’t run out as quickly as feared.
Norway announced its first cut with production in 18 years, he said. News reports said the country, Western Europe’s biggest producer, would reduce output by 250,000 barrels a day in June and 134,000 barrels per day during the second half of the year. It’s a cut of around 13%.
Shell said on Thursday that it’s cutting its first-quarter dividend for the first time in 80 years, citing the collapse in oil and gas demand and prices.
ConocoPhillips reported a loss for the first quarter and said it would cut production by 420,000 barrels a day in June. It has already cut output by 200,000 barrels a day.
This news saw West Texas Intermediate crude for June delivery jump $US3.78, or 25.1%, to settle at $US18.84 a barrel on Nymex, after a 22% surge on Wednesday.
In Europe, the June Brent crude contract which expired at the end of the session, added $US2.73, or 12.1%, to settle at $US25.27 a barrel. The most-active July contract gained $2.25, or 9.3%, to end the session at $US26.48 a barrel.
Brent, the international benchmark, gained about 11% in April after falling more than 65% over the prior three months.
WTI fell for the fourth month in a row, dropping over 70% during that time, including an 8% loss in April and the negative price of more than $US37 a barrel at the start of last week.
US crude stocks rose by 9 million barrels last week to 527.6 million barrels, according to the Energy Information Administration data showed,
Storage concerns, however, continue to weigh with the International Energy Agency saying global capacity could peak by mid-June.
Reuters reported that 9 companies including Chevron Corp and Exxon Mobil Corp have agreed to rent space to store 23 million barrels of crude in the U.S. emergency oil reserve on the Gulf Coast like Australia has done.
