Global oil prices jumped this morning on growing optimism as governments around the world continued to ease lockdown measures.
Worldwide standard Brent crude rose 5.2 per cent to hit $34.20, its highest levels in a month.
US benchmark West Texas Intermediate also surged 6.9 per cent to $31.47, levels which it has not seen since mid-March.
The jump meant that for the first time in over eight weeks both of the world’s standard crudes are trading above $30.
Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu said that the rise showed that the market was nearing balance.
She said: “Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery.
“Optimism on the demand side of the oil equation has also helped prices climb further, with gasoline demand coming back as governments ease confinement measures”, she added.
Production cuts by oil cartel Opec and its allies, including Russia, have also bolstered prices, which plunged to historic lows in April.
Although the June WTI delivery contract expires tomorrow, there is little chance of a similar sell-off to last month’s armageddon, which sent prices into the negative for the first time ever,
US operators have already announced 1.2m barrels per day worth of shut-ins for the May-June period, which will ease pressure on the markets.
Despite the rise, analysts are anxious that the recovery has been too rapid, with downward pressure on prices likely to reassert itself.
ING analyst Warren Patterson said: “Clearly the fundamentals in the market are improving, but we continue to believe that the market is rallying too much too soon, with the risk that further strength will only prolong the supply and demand imbalance”.