U.S. crude ended slightly higher on May 19, as U.S. Treasury Secretary Steven Mnuchin said he supported extending certain measures intended to bolster the economy, while Brent ended lower on concerns that output cuts might not be sufficient.
Oil has rallied for several days following numerous output cuts from major producers to curb supplies, and as demand picks up with governments worldwide easing restrictions on movement put in place to stop the spread of the coronavirus pandemic.
The front-month contract for WTI crude, which expires on May 19, settled up 68 cents a barrel, or 2.1%, at $32.50/bbl. The July contract, trading at vastly higher volumes, settled up $31.96/bbl.
One month ago, the June contract pushed into negative territory ahead of expiry. "It has been a best possible scenario race away from negative prices," said Bob Yawger, director of Energy Futures at Mizuho in New York.
Benchmark Brent crude was settled at $34.65/bbl, down 16 cents or 0.5%.
The market weakened early after Mnuchin and Federal Reserve Chair Jerome Powell faced sharp questions at a Senate hearing, but got another boost after Mnuchin said he was willing to consider extending and modifying a payroll loan program for small businesses.
Oil prices have risen in the past three weeks as states have rolled back lockdown provisions and global output has decreased.
Another drawdown in U.S. crude stockpiles in official weekly data to be released on May 20 could support prices more, said John Kilduff, a partner at Again Capital Management in New York.
Demand recovery is expected to be slow. Consultants the Eurasia Group said the global recession and potential spikes in the illness in emerging markets could hamper demand.
Still, with fuel demand improving, little chance was seen that crude prices would repeat the historic plunge below zero seen a month ago.
The company’s shares were down 5% after the news and have lost nearly 70% of their value this year.
Total had expected the oil price to be about $60 per barrel this year, but as the price is now about $30, it will leave the company with a much bigger shortfall, CEO Patrick Pouyanne said.
Industry experts discuss how the downturn and pandemic are impacting IT and OT for the oil and gas sector.