Oil posts weekly gain as OPEC+ cuts begin

Oil prices rallied at the end of last week as U.S. and global benchmarks posted their first weekly gain in four weeks as Opec and its allies started on record output cuts on the 1st May.

Brent crude end the week on above $26 a barrel which showed a recovery after plunging below $20 in recent weeks. While, the U.S. benchmark West Texas Intermediate (WTI), was up more than 16 per cent at almost $18 a barrel, which saw it build on strong gains on in the middle of the week.

The jump in prices were the result of lower-than-expected gain in U.S. crude inventories. Data from the U.S. Energy Information Administration showed that crude stocks in the country rose by 9 million barrels last week to 527.6 million barrels, less than the 10.6 million barrel increase analysts had forecast. Meanwhile, fuel stocks fell by 3.7 million barrels thanks to a slight rise in demand.

Rystad Energy analysis showed that the global imbalance between oil supply and demand, which they estimated had risen to 26.4 million barrels per day in April, was due to fall to 13.6 million barrels in May and then fall further to just 6.1 million bpd.

A big reason why oil jumped at the end of last week was because the May 1 saw OPEC and its allies start to cut production as part of the new OPEC+ deal to take a total of 9.7 million bpd off the market in May and June.