Oil prices have increased by 1% after the American Petroleum Institute (API) data showed more than expected fall in the US crude inventories.
This suggested that fuel demand is improving despite the rapid spread of the coronavirus outbreak across the world.
Brent crude rose $0.48 or 1.2% to touch $41.75 a barrel, while US West Texas Intermediate (WTI) crude futures were up $0.54 or 1.4% touching $39.81 per barrel, Reuters reported.
API data reported a decline in the US crude inventories by 8.2 million barrels to 537 million barrels and a rise in distillate inventories.
Meanwhile, investors are awaiting official data on inventories from the Energy Information Administration (EIA).
A drop in output from the Organization of the Petroleum Exporting Countries (OPEC), including Russia and other producers, together known as OPEC+, also supported prices.
The OPEC+ group has been reducing supply by approximately 9.7 million barrels per day (mbps) since 1 May.
Earlier this month, the group also agreed to extend output cuts until the end of next month.
The news agency quoted ING Economics as saying: “The fall in output means that OPEC over-complied with the deal in June, with compliance coming in at 107%.”
“It is likely that compliance will slip again in July, unless we see a significant improvement in compliance from Iraq and Nigeria.”
According to a Reuters poll of analysts, oil prices will consolidate at around $40 per barrel this year, with recovery expected to pick up during the fourth quarter.
So far, people infected with Covid-19 across the world have surpassed ten million, while more than half a million deaths were reported.