Brent Crude prices gained on Thursday’s early trading session, reversing previous losses recorded at Asia’s trading session. This was propelled by a sharp drop in oil stockpiles outweighing concerns that a spike in U.S. coronavirus infections and revived lockdown measures in California could stall recovery in fuel demand.
Brent crude (LCOc1) gained 0.57% to trade at $42.27 a barrel 10.37 am local time, after gaining 1.8% yesterday.
Brent crude is the leading global benchmark for Atlantic basin crude oil. The international benchmark is used to set the price of crude oil of about two-thirds of the world’s traded crude oil including that of Nigeria.
Chief Global Market Strategist at AxiCorp, Stephen Innes, spoke about the ultimatum the Saudis are giving other producers towards stabilizing crude oil price. He explained that “The price falls were further compounded by warnings from Saudi Energy Minister Prince Abdulaziz who, in no uncertain term, issued a stern ultimatum to OPEC+ laggards to comply with the cartel’s recent production agreement or face a price war. The Kingdom is not going to do the bulk of the heavy lifting while other member states are not 100% compliant.”
Jeffrey Halley of OANDO in a note to Reuters also explained that, “The drop in stockpiles, reports of oil moving out of floating storage, and strong manufacturing PMI data across the globe formed a constructive case for oil prices rising.”
“The overnight price action and EIA data have temporarily lifted the COVID-19 gloom that has capped oil prices all week,” he added.