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Monday 18 May 2020

Oil at One-Month High as Restrictions Ease

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LONDON (Reuters) — Oil prices climbed by $2 a barrel on Monday, with benchmark Brent hitting a one-month high and U.S. crude topping $30 supported by optimism about the re-opening of economies and output cuts by major producers.

Brent crude LCOc1 was up $1.99, or 6.1%, at $34.49 a barrel by 10:41 GMT, its highest level since mid-April. U.S. West Texas Intermediate (WTI) crude CLc1 was up $2.46 or 8.4% at $31.89 per barrel, its highest since mid-March.

“Optimism on the demand side of the oil equation has helped prices climb further, with gasoline demand coming back as governments ease confinement measures”, said Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu.

Summer weather is enticing much of the world to emerge from coronavirus lockdowns. Shops and restaurants prepared to reopen in Italy on Monday, while other centres of the outbreak such as New York and Spain gradually lifted restrictions.

The June WTI contract expires on Tuesday, but there was little indication of it repeating a historic plunge below zero last month on the eve of the May contract’s expiry. However, analysts cautioned that demand was not expected to recover to pre-coronavirus levels any time soon.

Also supporting oil prices are production cuts by OPEC and its allies, including Russia, a grouping known as OPEC+.

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