Oil prices leapt upwards today on hopes that the easing of coronavirus lockdowns around the world would boost demand, prompting encouraging tweets from US president Donald Trump.
After weeks of extreme volatility, both Brent crude and West Texas Intermediate (WTI) posted their fifth consecutive day of gains.
Worldwide standard Brent crude, which two weeks ago was trading at pre-millenium levels, rose 11.4 per cent to break through the $30 mark for the first time since early April.
US benchmark WTI meanwhile hit its highest levels in almost a month, rising 13.8 per cent to sit at $25.92.
The rises prompted the president to hail the gradual reopening of the US: “Oil prices moving up nicely as demand begins again!.
“Exciting to see our country starting to open up again!”, he added.
As well as various US states, countries such as Italy, Spain, India and Nigeria have begun to lift some lockdown measures and opening up businesses such as construction sites.
In addition to the rise in demand, the Opec alliance of oil producing nations and allies including Russia will begin cutting output by record levels this week.
Rystad Energy’s head of oil markets Per Magnus Nysveen said the rises made it clear that demand had now passed its lowest levels:
“The market is still vulnerable but now one thing is clear, the demand bottom is behind us, and this is manifesting in oil prices which are on the rise”.
However, he warned that lower prices would return as storage concerns over a supply glut had not suddenly disappeared:
“The existing problems did not magically get resolved, the storage constraint is still there, but a couple of weeks away, so we will see its effect on prices soon, as the market will get tight.
“But for traders, first things first, the prices cannot only decline daily, the boost in demand has to be cheered for and the current price rebound is exactly that.
“Make no mistake, this is how the market works, but lower prices will return, hitting a bottom around mid to end of May”.