Oil prices jumped on Thursday, after several producers said they would cut output and as signs the U.S. crude glut was not growing as quickly as many had feared brought an upbeat close to one of the most volatile months for oil trading in history.
Fuel demand worldwide slumped about 30% in April. Even after major oil producers led by Saudi Arabia agreed to slash production by nearly 10 million barrels per day (bpd), U.S. crude futures closed on April 20 at a record low in negative territory.
That collapse in U.S. West Texas Intermediate (WTI) futures made traders frantic to avoid taking delivery as the May front-month contract expired, forcing traders to pay $37.63 a barrel at settlement to get rid of their contracts.
Prices have recovered somewhat but remain down over 60% since the start of the year.
On its last day as the front-month, Brent futures for June delivery rose $2.73, or 12%, to settle at $25.27 a barrel, while U.S. West Texas Intermediate (WTI) crude for June rose $3.78, or 25%, to settle at $18.84.
That was the highest close for Brent since April 20 and WTI since April 16.
Brent, the international benchmark, gained about 11% in April after falling more than 65% over the prior three months. WTI, meanwhile, fell for a fourth month in a row, dropping over 70% during that time, including an 8% loss in April.
The more actively traded Brent futures for July, which will soon be the front-month, gained about 9% to settle at $26.48 a barrel.
Volume in WTI futures on the New York Mercantile Exchange hit around 36 million contracts in April, which Refinitiv data puts as second only to the previous month’s 40.9 million record.
“Oil prices are looking very constructive because over the next month or two, supply will meet demand,” said Edward Moya, senior market analyst at OANDA in New York, noting oversupply worries are slowly easing with a steady stream of headlines of crude production cuts.
Western Europe’s largest oil producer, Norway, said it would lower output from June to December, cutting production for the first time in 18 years as it joined other major producers’ efforts to support prices and curb oversupply.
Royal Dutch Shell Plc, meanwhile, announced its first dividend cut since World War Two.
U.S. oil and gas company ConocoPhillips said it would sharply reduce oil production in coming weeks, aiming to shut in 35% of its total output by June.
Russian gas producer Novatek PAO said it plans to cut capital expenditure by a fifth this year, mainly for developing its oil projects, a company manager said on Thursday.
U.S. crude inventories grew by 9 million barrels last week to 527.6 million barrels, Energy Information Administration data showed, below the 10.6 million-barrel rise analysts had expected in a Reuters poll.
Storage concerns, however, continue to weigh with the International Energy Agency saying global capacity could peak by mid-June.
U.S. President Donald Trump said his administration would soon release a plan to help U.S. oil companies.
Nine companies including Chevron Corp and Exxon Mobil Corp have agreed to rent space to store 23 million barrels of crude in the U.S. emergency oil reserve.
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