Crude rally continues as futures rollover passes without any drama

Oil futures roll over much more seamlessly this month and whilst the market’s problems are far from over, sellers won’t have to pay buyers to take away any barrels this time. The West Texas Crude was today up 2.86% priced at US$32.73 this morning ahead of expiry. WTI for July, the new front month, meanwhile is trading up 0.8% at US$31.91 per barrel, at the same time, Brent crude was changing hands at US$35 per barrel. It marks a continuation of the recent oil rally which was driven in part by an apparent easing of the international supply squeeze. OPEC and Russia struck a new accord to reduce their respective production volumes with a view to supporting better prices. The so-called OPEC+ cabal agree to cut output by some 9.7mln barrels per day for the rest of May and over June. Most recently, on Monday, an OPEC official suggested the production cap could potentially remain in place for the rest of the year. Crude oil crashed into negative pricing during one bizarre day in April as the prior future contracts expired amidst crushing oversupply as coronavirus lockdowns wiped out fuel consumption around the globe. It was a tipping point – and something of a technical anomaly of derivatives – in a market that has been under pressure for some time. OPEC+ previously supported prices with similar production cuts up until that arrangement collapsed in March.