Oil Resumes Gains On Signals That Market Rebalance Is Coming

Meanwhile, the 'back to normal' movement grows on several fronts: File Image/PixaBay

Oil prices on Tuesday resumed their upward trajectory based on signals that supply will be  more aligned with the reduced demand caused by the government pandemic lockdowns - while optimism continues to grow over economies slowly restarting.

West Texas Intermediate settled at $25.78 per barrel, up $1.64, while Brent settled at $29.98 per barrel, up 35 cents.

Four sources told media on Tuesday that the Organization of the Petroleum Exporting Countries (OPEC) and its allies want to maintain its 9.7 million barrel per day (bpd) cut beyond June when the cartel is next due to meet.

This came on the heels of Saudi Arabia making a surprise announcement that it will voluntarily deepen oil output cuts from June by 1 million bpd, and the United Arab Emirates and Kuwait pledging fresh cuts.

This, combined with substantial output cuts in other countries including the U.S., caused John Kemp, commodities analyst for Reuters, to state on Tuesday that "Futures prices and swaps linked to physical prices show the market has now moved through the worst of the crisis caused by the volume war between Saudi Arabia and Russia and the pandemic-driven collapse in consumption."

He went on to note that "Provided producers continue to limit output, the market should gradually move into deficit over the second half of the year as transport systems reopen, which should arrest and then start to reverse the stock build.

"Crude inventories will remain very high through the end of the year but they are no longer expected to continue swelling uncontrollably or threaten to exhaust available tank space."

Meanwhile, the global effort to return to normality saw more evidence of a  fear-mongering mainstream media - in the form of CNN being accused of "an egregious misreading of the data" in a recent story claiming 68 percent of Americans say they need a coronavirus vaccine before returning to "normal life."

Nicholas Grossman, an international relations professor at University of Illinois, cited numerous gross inaccuracies in CNN's reporting, including the news agency's misuse of a Gallup poll showing that 68 percent of respondents said a vaccine is "very important."

The fight back to normality continued Tuesday on the legal front as well, with the Center for American Liberty filing a federal lawsuit against California governor Gavin Newsom on behalf of the Professional Beauty Federation of California, whose 500,000 salon owners demand that their businesses be reopened.

Also on Tuesday, Rand Paul - the only U.S. senator to have had a confirmed case of COVID-19 - told public health official Dr. Anthony Fauci that the public health response to the pandemic has been riddled with "wrong prediction after wrong prediction" and that Fauci should not be making decisions on issues outside his purview.

Finally, 43 states have committed to a partial opening of nonessential businesses despite more infections being reported - possibly a reflection of Paul's mindset of coronavirus predictions being too faulty to fully endorse and the growing argument that lockdowns are proving to be more harmful to lives and livelihoods than the virus itself.