Oil prices have edged-up as data highlighted pickup in crude demand in China after easing of the lockdown measures that were put in place to contain Covid-19 pandemic.
Brent crude futures increased $0.39, or 1.3%, to touch at $31.52 a barrel, while US West Texas Intermediate (WTI) crude futures were up $0.19 to reach $27.75 a barrel, Reuters reported.
Both Brent and WTI futures witnessed gains over the past two weeks.
Data from industry group International Energy Agency (IEA) highlighted that crude inventories are expected to fall by about 5.5 million barrels per day (bpd) in the second half this year (H2 2020).
EIA noted that the US crude inventories fell for the first time in 15 weeks.
OANDA senior market analyst Edward Moya was quoted by the news agency as saying: “WTI crude will struggle to break above the $30 level until both the economic outlook improves for the US and some of the downside risks ease.”
As per the data released on 8 May, use of China’s daily crude oil rebounded last month as refineries started resuming operations.
ING Research analysts said in a note: “The fundamentals in the market are clearly improving.
“But we still believe that in the near term, the upside is limited given that we are still in a surplus environment … There is plenty of inventory for the market to digest.”
According to Reuters, output cuts from major producers will boost the trend towards lower stockpiles, but the US crude is not likely to see any sharp gains.
The OPEC+ Group has officially started record supply cut production of approximately ten million bpd from 1 May.
Furthermore, Saudi Arabia said earlier this week that it plans to cut production by a further one million barrels per day (bpd) next month.
Earlier this week, Reuters cited sources as saying that OPEC+ now intends to extend overall production cuts beyond May and June during their next meet.