WTI rallies as output cuts are cheered, June eyes break of $21
- Oil was climbing on Monday on output cuts, WTI breaking and closing above $20bbls.
- Geopolitical tensions being churned between China and the US.
The price of a barrel of oil on Monday was climbing with futures finishing higher. West Texas Intermediate crude for June delivery on the New York Mercantile Exchange, rose 61 cents, or 3.1%, to finish at $20.39 a barrel after an earlier dip to as low as $18.05. At the time of writing, WTI is trading at $23.68 having travelled between a low of $19.70 and a high of $23.76.
Despite the tensions between China and the US escalating, energy markets cheered the announcements of voluntary production cuts by US oil firms as the struggling market tries to defend itself out of a corner due to the combination of the price wars and COVID-19.
While volatility remains prevalent in the prompt months for crude, which remain under pressure, some semblance of stability could start to return to the market. With OPEC+ production curtailments underway, along with substantial production declines from non-OPEC nations and ETF restructuring eliminating some left tail risk from the market structure, prices have found some support,
– analysts at TD Securities explained.
Global anti-China sentiment is at its highest since the 1989 Tiananmen Square crackdown
Meanwhile, in response to Mike Pompeo, Secretary of State, interview and accusations on ABC News reported on here: What you need to know as markets open: Pompeo and Trump ratcheted up US and China tensions, the Global Times (GT) wrote an editorial here: Pompeo's anti-China bluff strategy reveals all-or-nothing mentality to fool US voters – GT.
Trump's intelligence agencies say they are still examining a notion put forward by the president and aides that the pandemic may have resulted from an accident at a Chinese lab. However, the WHO has confirmed it has not received evidence from Washington about its speculation about Wuhan laboratory.
Nevertheless, China faces a growing backlash from critics who have called to hold Beijing accountable for its role in the pandemic. An internal Chinese report warns that Beijing faces a rising wave of hostility in the wake of the coronavirus outbreak that could tip relations with the United States into confrontation, people familiar with the paper told Reuters.
WTI levels