Oil prices continued to pick up gains this morning due to the combination of signs that crude stocks are not growing as quickly as expected and that demand is slowly starting to pick up.
After impressive gains yesterday, US standard West Texas Intermediate increased another 15 per cent to $17.22, buoyed by a smaller than expected increase in oil inventories.
According to data yesterday from the US Energy Information Administration, stockpiles only increased by 9m barrels, not the 10.6m analysts had expected.
Worldwide benchmark Brent crude oil also increased 7.8 per cent to reach $24.21, after a 10 per cent gain yesterday.
Analysts greeted the news enthusiastically, with Jeffrey Halley, senior market analyst at OANDA saying that “WTI could quickly move to $20 a barrel and Brent to $30 a barrel in this environment”.
However, he stressed that the recovery was “miniscule” in terms of the overall decline in the oil price since the pandemic began to decimate demand.
Rystad Energy’s head of oil markets Bjornar Tonhaugen said: “Although the stocks build was lower than expected and helped prices, it is a reminder that crude stocks in the US will continue to build in coming weeks with a very real risk that we will reach practical tank-tops already during May.
“If the already-stretched storage capacity is getting fuller and fuller every week, a rise in prices cannot be sustainable for long as the problem is not really resolved, just postponed”.
The rises came as the International Energy Agency warned that global energy demand could drop by six per cent in 2020 due to coronavirus lockdown measures.
The IEA’s director Fatih Birol said that the estimate was a conservative one and the demand drop could be far higher depending on how long the measures persist for.