Oil has rebounded since dropping below zero in April as output cuts reduced a global glut
Oil traded near $38 a barrel in New York in choppy trading, as the market was caught between weaker equities and an ongoing market rebalancing.
Futures whipsawed between gains and losses. While stock markets retreated and Saudi Arabia decided to end additional supply curbs this month, there are signs of a broader rebalancing.
US crude inventories are forecast to decline for a second week, ahead of industry figures later, while Canadian bank RBC said the market is tightening four to six weeks sooner than expected. Libya’s largest oil field was said to have restarted after a brief halt.
Oil has rebounded since dropping below zero in April as output cuts reduced a global glut and demand picked up following the easing of lockdown restrictions in some countries. However, with a surplus of fuels, most notably diesel, looming over oil’s recovery, Goldman Sachs Group Inc. has turned bearish in the short term due to poor returns from refining.
“Oil prices today have been buffeted between fundamental and macro drivers, with neither factor having the upper hand so far,” said Harry Tchilinguirian, oil strategist at BNP Paribas.
In Libya, the country’s largest field was said to restart after a brief halt, according to people with knowledge of the matter. The nation’s National Oil Company had earlier declared force majeure on exports of Sharara crude, just three days after the field restarted.
Meanwhile, Iraq has asked some Asian refiners to consider forgoing prompt shipments of its Basrah crude, raising speculation that OPEC’s second-biggest producer is trying to comply with pledged output cuts. The country and some others were recently pulled up by Saudi Arabia and Russia for pumping above their quotas.