Oil prices mixed as Brent retreats on profit-taking after rally

Down-$067 or 1.98

Down-$067 or 1.98

Futures in NY fell around 6% below $32 a barrel on Friday, but are still headed for a fourth consecutive weekly gain.

USA crude inventories fell by 5 million barrels last week, Energy Information Administration data showed, while stocks at the Cushing, Oklahoma, delivery hub dropped by 5.6 million barrels. Hossein Kazempour Ardebili, who died on Saturday, was one of the ultimate OPEC negotiators.Crude futures rose 2.4% to 265.8 yuan a barrel on the Shanghai International Energy Exchange after climbing 4.4% last week.

Oil prices slumped on Friday after China's decision to omit an economic growth target for 2020 renewed concerns that the fallout from the coronavirus pandemic will continue to depress fuel demand in the world's second-largest oil user.

Analysts S&P Global Platts, in turn, expect an increase in oil reserves by 2.4 million barrels, distillates - by 3.2 million barrels. In a sign that traders no longer see much chance of another sharp plunge in prices, the premium to pay for out-of-the-money puts on West Texas Intermediate versus calls fell to the lowest level since March 6, just before the price war kicked off.

In the latest sign the supply glut is easing, U.S. crude inventories fell by 5 million barrels last week.

Traders will be keeping an eye on United States demand readings for the upcoming Memorial Day weekend, a time when consumption usually rises.

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The so-called OPEC+ cabal agree to cut output by some 9.7mln barrels per day for the rest of May and over June.

"We need to see more signs that rebalancing is taking place, primarily through more demand", said Gene McGillian, director of market research at Tradition Energy. "So, the supply could very quickly overwhelm the demand".

Oil retreated from the highest level in more than two months as doubts over the strength of China's economic recovery and rising tensions between Washington and Beijing ate away at its weekly advance.

For ordinary investors, it was perhaps the most spectacular demonstration of the unique perils of trying to wager on the price of oil.

And let's not forget, any Covid-19 resurgence aside, there is always a risk that OPEC+ compliance with production cuts might falter as oil prices recover.

-With assistance from Alex Longley, Ann Koh and James Thornhill.

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