Oil prices have surged on signs that the US crude glut is growing less quickly than expected, thereby extending sharp gains in the previous session.
According to Reuters, West Texas Intermediate (WTI) futures were trading at $17.21 a barrel at 0350 GMT, a 14.3% gain from the previous session.
Meanwhile, Brent crude LCOc1 futures rose $2.33 to $24.87 a barrel.
Data released by industry group US Energy Information Administration (EIA) has highlighted an increase in US crude stocks to 527.6 million barrels in the week that ended on 24 April, by nine million barrels.
The recovery of gasoline demand, which has been shattered by Covid-19 restrictions, also supported oil prices.
CMC Markets Sydney chief market strategist Michael McCarthy was quoted by the news agency as saying: “I think we’re closer to an equilibrium price for WTI between $15 and $20. That reflects all of the known knowns – the demand destruction that has led to storage filling up and pending supply cuts.”
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Meanwhile, gasoline stockpiles in the US dropped by 3.7 million barrels, with a little rise in fuel demand countering a rebound in refinery output.
ING commodities strategy head Warren Patterson said: “In the current environment, the market appears desperate for any positive signs, no matter how mild they seem. The focus this week has been on inventory and demand numbers from the US.”
US President Donald Trump said his administration is all set to release a plan to help oil companies in the country, shortly.
According to Treasury Secretary Steven Mnuchin, this is expected to include addition of more barrels of oil to national reserves.