Oil Crosses $30 Level for First Time in Two Months

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The number of drilling rigs in the U.S. declined for the ninth consecutive week last week to levels not seen in over ten years.

Oil prices touched higher than $30 per barrel for the first time since March as oil producers in the United States and other countries continued to reduce production efforts. The cuts are proving to help rebalance the oil market that has suffered from a supply glut due to increased production in recent weeks and a decreased demand due to coronavirus closures in the past few months.

Crude oil pricesU.S. WTI futures were trading at $30.70 per barrel as of 1:22 p.m. HK/SIN, up 4.32 percent. Brent crude futures were up 3.17 percent to $33.53 per barrel. The number of drilling rigs in the U.S. declined for the ninth consecutive week last week to levels not seen in over ten years. Stockpiles at the storage facility in Cushing, Oklahoma, contracted for the first time since February, which reduced concern that the U.S. was running out of storage space.

According to reports by Bloomberg, analysts expect oil prices to remain firmly in the $30 per barrel range in the near term and are unlikely to fall below $20 per barrel again unless there are serious second waves of infection.

The positive mood for oil was supported by Federal Reserve Chairman Jerome Powell weho provided a positive outlook for economic recovery later on in 2020. “Assuming there is not a second wave of the coronavirus, I think you will see the economy recover steadily through the second half of this year,” Powell remarked on Sunday night. Powell added that “people shouldn’t bet against the American economy,” though he added that a complete economic recovery may not happen until a vaccine for the novel coronavirus is released.

Powell’s optimism came as the U.S. faces a deluge of unemployment filings, with some 36.5 million Americans filing for unemployment claims this month.

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The U.S. dollar edged lower on Monday afternoon in Asia, with the dollar index falling 0.04 per ent to 100.36 .DXY. The dollar gained against the yen, trading up 0.09 percent to 107.12. It eased agsint the euro, which gained 0.04 percent against the greenback to trade at $1.082. The pound was lower against the dollar, trading 0.066 percent lower to $1.21.

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