Oil prices extended their gains this morning on hopes fuel demand would begin to pick up as an easing of coronavirus lockdown measures also pushed up Asian stocks.
Brent crude rose 4.3 per cent to $28.37 a barrel, while US crude was up 1.38 per cent to $21.77 a barrel as crude supply cuts took effect and pandemic restrictions began to be lifted.
“While April was marked by a collapse in oil demand as countries across the world locked down simultaneously, the expectation is that May demand could well pick up and that storage capacity could well start to rise, on rising consumption, as the oil surplus starts to fall back,” said Michael Hewson, chief market analyst at CMC Markets.
There was reduced trading in Asia as China, Japan and South Korea are all on holiday. Australia’s ASX 200 rose 1.26 per cent, while Hong Kong’s Hang Seng index climbed 0.66 per cent.
The rises tracked late growth on Wall Street, where the S&P 500 closed up 0.42 per cent, driven by tech stocks such as Microsoft, Apple and Amazon.
This offset falls in aviation stocks after Warren Buffett’s Berkshire Hathaway sold its entire stake in the four largest US airlines.
US markets were bolstered by more optimistic statements from authorities in California and New York about restarting the economy. New York governor Andrew Cuomo yesterday outlined a phased reopening of his state, which has been the hardest hit by the Covid-19 pandemic.
“Following a late rebound on Wall Street and a rise in Asian stocks overnight, European bourses are heading towards a stronger start on the open. Investors are taking stock of the gradual reopening of economies whilst oil also picks up on greater fuel demands,” said Fiona Cincotta at City Index.
“Optimism surrounding the gradual easing of lockdown restrictions and the impending economic recovery is outweighing rising US — Chinese tensions, which had dragged on sentiment in trading on Monday.”