LONDON—Oil prices rose on April 17 as President Donald Trump laid out plans to ease the U.S. coronavirus lockdown and on reports, later played down, that a drug may potentially help treat COVID-19.
Brent rose by 54 cents, or 1.9%, to $28.36 a barrel by 5:33 a.m. CDT, and U.S. crude for June was up 4 cents, or 0.2%, at $25.57.
The less active U.S. crude contract for May tumbled by $1.59, or 8%, to $18.28, attributable to the imminent expiry of the contract, on April 21, and fast-filling crude storage.
“As the oversupply is more a topic for right now, the May contract trades at a deep discount to June,” UBS analyst Giovanni Staunovo said.
New Guidelines
Investors pinned their hopes on plans to ease lockdown measures after Trump laid out new guidelines for U.S. states to emerge from a coronavirus shutdown in a staggered, three-stage approach.
“If more of the global economy enacts plans to reopen and restores some sense of normality, that could help oil prices find a firmer floor in May, aided by the OPEC+ supply cuts kicking in,” said Han Tan, market analyst at FXTM.
OPEC and producers including Russia, a grouping known as OPEC+, agreed on production cuts of nearly 10 MMbbl/d last weekend after an earlier oil supply pact collapsed.
Oil prices were also boosted by a report of encouraging partial data from trials of U.S. company Gilead Sciences’ experimental drug remdesivir in severe COVID-19 patients, although the company cautioned that full data would need to be analyzed to draw any conclusion.
Investors Cautious
Analysts said investor sentiment remained cautious, with readings of economic indicators getting worse as global supply chains remain shut and large-scale production halts put millions out of work.
Both oil benchmarks are still heading for a second consecutive week of losses, with U.S. oil prices at 18-year lows.
China’s daily crude oil throughput in March sank to a 15-month low, with state refiners maintaining deep output cuts, but there are some signs of recovery as the country begins to ease coronavirus containment measures.
The hobbling of China’s economy was also highlighted by data showing that GDP shrank 6.8% year on year in the first three months of this year, the first such decline since quarterly records began in 1992.
ConocoPhillips on April 16 said that it will reduce planned North American output by 225,000 bbl/d, the largest cut so far by a major shale oil producer to deal with the unprecedented drop in demand.
“This highlights that the market will see meaningful cuts from outside the OPEC+ group without the need for mandated cuts,” ING bank said in a note on April 17.
“Instead, market forces will do the job, with the low-price environment forcing producers to cut back.”
Recommended Reading
Activity Offshore Norway Expected to Remain Steady in 2024
2024-01-11 - The Norwegian Offshore Directorate provided updates on 2023 activity, including 14 wildcat discoveries and eight projects going online and urging exploration in frontier areas.
ONGC’s M Field Starts Production in Bay of Bengal
2024-01-09 - ONGC’s M Field represents the second phase of the larger 98/2 Block development project which is expected to reach peak production of 45,000 bbl/d and 10 MMcm/d.
E&P Highlights: Jan. 8, 2024
2024-01-08 - Here’s a roundup of the latest E&P headlines including the second biggest deepwater gas find of 2023 and new contract awards.
Prairie Operating Acquires More D-J Basin Assets for $94.5MM
2024-01-15 - Houston-based Prairie Operating Co. is scaling its D-J Basin footprint with a $94.5 million acquisition of Nickel Road Operating LLC.
US Drillers Cut Oil, Gas Rigs for Second Week in a Row
2024-01-12 - The oil and gas rig count, an early indicator of future output, fell by two to 619 in the week to Jan. 12, the lowest since November.