Oil prices rally amid mega energy deal

Image of daily change for major financial markets

Image of daily change for major financial markets

After closing the previous session at $70.98 a barrel on Thursday, worldwide benchmark Brent crude gained 0.2% to trade at $71.12 per barrel at 0630 GMT.

The combined supply cuts have helped to drive a 32 percent rally in crude prices this year to almost $72 a barrel, prompting U.S. President Donald Trump to call on OPEC to ease its market-supporting efforts.

The U.S.' sanctions on Iran and Venezuela caused a decline in oil production and exports of these countries.

The monthly oil market report for April said that the reality is different according to direct communication, with Angola producing 50,000 fewer bpd to 1.373 million bpd in March.

Early in the week, crude oil surged to a five-month high and continues to hover around these levels, however, new concerns over future demand have slowed down the upside momentum on the daily chart.

The International Energy Agency said on Thursday that Venezuelan crude production has dropped below 1 million bpd to 870,000 bpd due to USA sanctions, and Iranian supply could fall further after May if Washington tightens its sanctions against Tehran, as many experts anticipate. Demand for OPEC crude in 2018 averaged 31.35 million bpd.

Bernstein said it expected oil demand to peak around 2030, but added that "we expect a long plateau rather than a sharp decline" in consumption after that. They meet on June 25-26 to decide whether to extend the pact.

After a production glut lead to prices dropping previous year, OPEC members and allies including Russian Federation agreed in December to trim production.

Both benchmarks notched a weekly gain of about 1 percent, which was Brent's third consecutive week of gains and the sixth straight rise for WTI.

The two major producers are estimated to account for 1.76 million bpd in loss output this year, according to the International Energy Agency's (IEA) Oil 2019 Report released on March 11. Additionally, U.S. crude output remained at a record 12.2 million barrels per day.

The rig count fell for the past four months as independent exploration and production companies cut spending on new drilling to focus on earnings growth instead of increased output.

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