Oil prices stage comeback to push up stock markets
Oil prices staged a small comeback this morning, boosting stock markets, as data from the US suggested crude inventories were not filling as fast as had been previously feared.
After several weeks of rapid price swings, Brent crude gained three per cent this morning, recovering to $21.
The gains boosted global stock markets, with the FTSE up about one per cent. Oil majors BP and Shell both saw shares rise about three per cent in the morning’s trading.
US standard West Texas Intermediate (WTI) picked up 13 per cent to rise to nearly $14, clawing back some losses from earlier in the week.
The gains came on the back of data from the American Petroleum Institute that showed that crude stocks had increased by 10m barrels in the week ending 24 April, lower than analyst expectations of 10.6m barrels.
Traders’ eyes have now turned to the US Energy Information Administration, which is due to report crude stock inventories this afternoon, to see whether it will corroborate reports of slowing output.
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After three weeks of gains of 15m barrels, some slowdown is to be expected, markets.com chief markets analyst Neil Wilson said.
Some producers are likely to have begun shutting in oil production already, with several US states looking at how to curb production.
In Texas, regulators will vote next week on whether to order production cuts, with Oklahoma and North Dakota also looking at ways to legally enforce limits.
US treasury secretary Steve Mnuchin also said yesterday that the government was looking at extending liquidity to oil firms.
Any additional cuts would add to oil cartel Opec’s record 9.7m barrels per day curb, which is set to begin in May.
However, the recognition that this will not be enough to offset an overhang of 26m barrels a day in May alone has led some producers to consider making more cuts.