Commodity Market: Crude Oil hits two-week highs on OPEC+ supply cut promises, optimistic demand estimates by two major traders

Futures on US West Texas Intermediate Crude Oil extended gains from the previous trading day and touched highs not seen since June 8th on Friday, after OPEC members and allies pledged to meet their commitments on supply cuts, while two global oil traders suggested a sound recovery in oil demand.

Iraq and Kazakhstan pledged to make up for oil overproduction in May and to meet their supply cut commitments, which provided support to the market.

“The supply cuts that they’ve (OPEC+) implemented and with other members like Iraq proposing to make up for the lack of adherence to the agreement in May and June does tighten up the market in the shorter term,” Daniel Hynes, senior commodity strategist at ANZ, said.

“But it’s not a strong signal of a wholesale shift in the medium term outlook in the market.”

Meanwhile, demand estimates by two major oil traders also added to oil market optimism. Vitol, the biggest independent oil trader globally, said that oil use worldwide was increasing by 1.4 million barrels a day every week during the current month. According to Vitol, June’s growth exceeds 5.5 million barrels.

Trafigura, another major player in the market, estimated that oil demand worldwide was currently 10 million barrels per day lower compared to levels before the COVID-19 pandemic. This estimate suggests a considerable improvement from a previous calculation covering a short period between late March and early April – nearly 30 million barrels per day below pre-crisis levels.

Saudi Aramco’s CEO Amin Nasser also supported these estimates. He said that, at present, oil demand was at nearly 90 million barrels per day, or 10% below pre-pandemic levels.

As of 9:30 GMT on Friday, WTI Crude Oil Futures were gaining 2.95% to trade at $39.98 per barrel, after earlier rising as high as $40.27, or a price level not seen since June 8th ($40.42). WTI futures have risen 9.80% so far this week, following a 6.57% slump in the preceding week, their worst performance since mid-April.

Brent Oil Futures were up 2.93% on the day to trade at $42.56 per barrel, after earlier rising to $42.86, or a level not seen since June 8th ($43.40). Brent futures have gained 9.71% so far this week, following a 6.98% slump in the prior week.

Daily Pivot Levels (traditional method of calculation) – Crude Oil

Central Pivot – $38.31
R1 – $39.48
R2 – $40.13
R3 – $41.30
R4 – $42.48

S1 – $37.66
S2 – $36.49
S3 – $35.84
S4 – $35.20

Daily Pivot Levels (traditional method of calculation) – Brent Oil

Central Pivot – $41.01
R1 – $41.95
R2 – $42.54
R3 – $43.48
R4 – $44.41

S1 – $40.42
S2 – $39.48
S3 – $38.89
S4 – $38.29