(Bloomberg) -- Oil eased in Asia after two weeks of gains, with escalating production cuts around the world starting to reduce the glut hanging over the market.
Futures in New York fell 1.4%, after climbing 25% last week. Qatar Petroleum cut its official selling prices for April crude sales by 51%, the official Qatar News Agency reported, setting both grades at the lowest in more than twenty years. Oil prices have tumbled around 60% this year as Covid-19 lockdowns caused the biggest demand shock in a generation.
Economic restrictions are starting to be eased around the world, offering some hope that a demand recovery might be on the horizon as people step into their cars and avoid public transport. U.K. Prime Minister Boris Johnson stressed there would be no immediate end to the lockdown as he detailed the initial steps to kickstarting the economy on Sunday, while New York Governor Andrew Cuomo will announce Monday details on how the state would begin to reopen.
U.S. shale producers continue to slash output in response to this year’s price collapse. EOG Resources Inc (NYSE:EOG). is cutting about a quarter of its oil production for May in one of the biggest U.S. shale retrenchments to date, while the number of U.S. rigs drilling for oil fell to a level not seen since before the shale-oil revolution kicked off at the beginning of the last decade.
Bets that the oil market is coming back from its historic price crash are gaining traction following the American shale industry’s rapid retrenchment, plans to ease pandemic-related lockdowns and the start this month of OPEC+production cuts. Hedge funds boosted their net-bullish wagers on U.S. crude to the highest in a year in the week ended April 28.
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Saudi Aramco (SE:2222) is in early talks about further staggering payments for the acquisition of a controlling stake in local petrochemical giant Saudi Basic Industries Corp. as the collapse in oil prices puts pressure on its finances.
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