geopolitics

New York oil futures rose 2.3 percent on Friday to close at $39.75, the highest level since March 6th. The 9.6 percent increase for the week marks the seventh gain in the last eight weeks.

Oil futures fell by some 8 percent last Thursday, before closing out a quiet Friday at $36.26 in New York and $38.73 in London. Over the previous six weeks, prices have been climbing due to the OPEC+ and US shale production cuts, and the easing of pandemic lockdowns in China, Europe, and North America.

Oil prices posted a sixth weekly gain in London, more than doubling to $42.30 a barrel since April as demand recovers from the lockdowns. NY futures closed at 39.55 on Friday, up $2.14 for the day.

Futures were volatile last week with prices bouncing between $31 and $35 a barrel in response to the latest news. Oil closed out May on Friday with a record monthly gain of 88 percent on hopes demand for oil would continue to rise as economies reopen and crude production continues to fall.

The four-week run of climbing crude prices continued through Wednesday, but prices fell on Thursday and Friday as doubts arose over the prospects for China’s economy and rising tensions with the US over the virus, the trade deal, and Hong Kong.

Oil posted its first back-to-back weekly gain since February amid optimism that production cuts are beginning to eat into the massive supply glut. Futures in New York climbed 25 percent to circa $25 and $31 in London.

Crude posted its first weekly gain in a month as global production cuts start to lift physical markets. Futures in New York rose 17 percent last week to close at $19.78 in NY and $26.44 in London.

The long-awaited crash in the oil markets came last week when traders finally realized that oil consumption was so low and production was so high that the world was within weeks of having no place to store crude and oil products.  

The global demand for oil is expected to be down by nearly 30 million (or maybe even 40 million) b/d in April, according to the latest estimates.  Some forecasts still optimistically assume that demand will bounce back in the second half of the year in a “V-shaped” recovery.  

It was a volatile week as the world’s major oil producers struggled to find a way to raise prices from ruinous levels as the global consumption of oil sank by about a third from pre-virus levels.