Meanwhile, Vitol is bullish about a robust recovery: File Image/PixaBay
The expectation of crude traders that nations would undertake better compliance with regards to oil output cuts outweighed concerns about the spike in new coronavirus infections in the U.S. and elsewhere, resulting in another session of gains for the commodity on Thursday.
Brent settled at $41.51 per barrel, up 80 cents or nearly 2 percent, while West Texas Intermediate settled at $38.84 per barrel, up 88 cents, or 2.3 percent.
The rises came as a breakdown of a second straight weekly rise in U.S. crude stockpiles showed lower inventories of gasoline and distillates, indicating higher demand.
Phil Flynn, senior market analyst, Price Futures Group Inc.
You're going to see more OPEC compliance
They also accompanied the Organization of the Petroleum Exporting Countries (OPEC) meeting with its allies on Thursday to review their supply cuts (but recommendations to extend those cuts - which amount to a record 9.7 million barrels per day (bpd) - into August will reportedly not take place until July).
OPEC pressed members Iraq and Kazakhstan to comply better with their quotas, and this caused Phil Flynn, senior market analyst at Price Futures Group Inc., to remark, "You're going to see more OPEC compliance; I think we'd be a lot higher if it weren't for these coronavirus fears."
Even though the virus spikes are dominating headlines, Vitol, the world's largest independent oil trader, estimated that global oil use is rising by 1.4 million bpd every week in June, taking this month's growth to more than 5.5 million barrels.
Giovanni Serio, Vitol's chief economist, said, "Our short-term tracking of demand confirms a healthy demand recovery from the lows of April; China led the recovery in April and May and in the past couple of weeks, U.S. and European countries have followed."
Still, there's no question that the government-mandated lockdowns, which were encouraged by faulty computer modelling showing a death toll in the millions in North America if nothing was done to slow the virus (the number was subsequently downsized to the low six figures when social distancing was accounted for) have taken their toll.
Thanks to the lockdowns lasting months instead of weeks as initially prescribed by health officials, the U.S. will suffer a deeper than expected contraction in the second quarter, according to the International Monetary Fund; this is in contrast to the momentum of China's economy, which will likely grow by 1.2 percent this year and 9.2 percent in 2020.
The unofficial consensus is that media-stoked fears about the virus spikes in addition to a long-warned second wave of the virus will continue to cap crude gains in coming days and weeks, despite steady and even groundbreaking progress in treatment and vaccine development.
Soumya Swaminathan, chief scientist for the World Health Organization, attempted to counter the alarmist headlines on Thursday by stating she was optimistic that hundreds of millions of vaccine doses can be produced this year and 2 billion by the end of 2021.
She added, "The good thing is, we have many vaccines and platforms so even if the first one fails, or the second ones fails, we shouldn't lose hope, we shouldn't give up."
The WHO is currently drawing up plans to help decide who should get the first doses, with priority said to be given to frontline workers and those vulnerable due to age or illness, as well as those living in high risk settings such as care homes and jails.