The oil market has been stabilizing throughout the week for two reasons - a controlled decrease in supply paired with an increase in the demand for oil.
First of all, there have indeed been some improvements in terms of the demand for crude oil. Countries in Europe have reopened their economies after a prolonged period of lockdowns that heavily impacted the industrial demand for oil. In China, despite fears of a second wave of the coronavirus pandemic, factories are also working again. Most of the United States have also returned back to normal.
The restoration of industrial production and the freedom of movement have both had beneficial effects on the demand for oil.
In addition, the Organization of Petroleum Exporting Countries, together with Russia and other allies, known as OPEC+, is keeping up with the latest agreement to keep production cuts in place. The agreement was recently renewed to last until the end of July.
Experts have raised doubts that the current duration of the agreement will be enough since the coronavirus has curbed demand so much. Still, Russia has stated that it will definitely restore its regular oil production levels from August, so it is possible for oil prices to turn volatile then again.
For now, we are seeing the WTI trade at $39.87, while the Brent crude is at $42.38, which are the highest levels in several months.
