Oil prices remained firm as data showed a recovery in China’s crude imports, but investors predicted further gains could be capped by the ongoing glut in crude supplies as the Covid-19 outbreak squashes fuel demand.
US West Texas Intermediate (WTI) crude futures increased $0.4, or 0.2%, to $24.03 a barrel, at 0341 GMT, while Brent crude LCOc1 futures were up by $0.3 to $29.75 a barrel at this time, Reuters reported.
Based on customs data provided for the first four months this year, Reuters calculated that imports by China climbed to 10.42 million barrels day (bpd) last month, while it stood at 9.68 million bpd in March.
OANDA senior market analyst Edward Moya was quoted by the news agency as saying: “Oil prices should eventually settle on a wide $10 range, with WTI crude’s upper boundary being around the $30 a barrel level, while Brent crude targets the $35 a barrel level.”
Data released by industry group US Energy Information Administration (EIA) highlighted an increase in the US crude inventories by 4.6 million barrels. Last week, these inventories were up for a 15th straight week.
However, gasoline stockpiles in the US dropped for a second week as some of the states across the country lifted lockdown restrictions.
In a note, Capital Economics said: “The latest report (on U.S. inventories) added to tentative evidence that – after a catastrophic few weeks – the pressure on the U.S. oil market is beginning to lessen.
“That said, we wouldn’t rule out more turbulence in the coming weeks.”
The record supply cut production of approximately ten million bpd cuts agreed by the OPEC+ Group has officially started from 01 May.
These cuts are to stabilise prices which collapsed due to the plunge in demand in economies as a result of coronavirus pandemic.