Crude oil futures soar to 3-month high

Oil advances towards US$43 after Opec+ extends production cuts

OPEC, allies agree to extend oil output cuts by 1 month

OPEC+ to extend the oil output cut deal, but Gulf OPEC producers to end voluntary cuts from next month.

USA crude on Monday traded above $40 a barrel for the first time since early March, as the market reacted positively to the extension, before selling off later in the session.

The recovery of global benchmark Brent crude futures from a 21-year intraday low of $15.98 a barrel early in March to the close of $40.80 on Monday means that crude is no longer the massive bargain it was Chinese buyers may now scale back some of their purchases for strategic and commercial storage purposes.

Saudi Arabia's extra voluntary oil-production cut, which came on top of the OPEC+ supply curbs, will cease at the end of this month as demand recovers.

The Organization of Petroleum Exporting Countries, Russia and other producers - a group known as OPEC+ - agreed in April to cut supply by 9.7 million barrels per day (bpd) in May and June.

He said both benchmarks would require stronger bullish factors to propel prices back to where they were before March 6, when they crashed after OPEC and Russian Federation initially failed to reach an agreement on supply cuts.

Freight rates for moving crude oil from the Persian Gulf to China peaked for the week ending 24 April at United States dollars 195,658 per day, before their decline in tandem with the oil production cut from 1 May, hitting a daily USD 79,794 on the first day of May.

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And job losses continued in the air transport, transportation and warehousing, mining and logging, and information sectors. The numbers will be a relief to policy makers after the unprecedented loss of about 3 million jobs in March and April .

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"When you have Brent approaching $40, it is a good sign", one OPEC delegate said.

"It would be too good to be true to have a total of almost 11 million bpd in voluntary cuts extended for a month at times when we see supply deficits". A political deadlock in the country has further complicated production cuts.

"The potential return of Libyan output could also cause considerable challenges for the OPEC leadership, " said Helima Croft, Head of Global Commodity Strategy at RBC Capital Markets.

The El-Sharara oilfield produces more than 300,000 bpd of crude oil, forming roughly one-third of the oil-rich country's production.

The number of operating USA oil and natural gas rigs fell to a record low for a fifth week in a row in the week to June 5, according to data from Baker Hughes Co.

The storm weakened to a tropical depression on Monday morning. "Also the prospect of higher production from Saudi Arabia, Kuwait, UAE and Oman in July is not helping prices as well", UBS analyst Giovanni Staunovo said.

"The issue of compliance is a major fault line in OPEC+ now", said Vandana Hari, founder of energy consultancy Vanda Insights in Singapore.

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