Oil prices have gained into Thursday, with signs producers are curbing production. Fuel demand has collapsed as the coronavirus pandemic continues to impact the world’s economies.
According to Reuters, Brent crude (LCOc1) trading was up $0.99 to $21.36 a barrel at 0506 UTC.
Meanwhile, the West Texas Intermediate (WTI) CLc1 was up $0.98 at $14.76 a barrel.
The US crude futures traded at historic lows on Monday as oil prices fell below $0 a barrel, on concerns that US will run out of storage for its oil stocks. The country has huge oil stockpiles due to low demand, caused by the Covid-19 lockdown.
Data from Energy Information Administration (EIA) showed a rise in US stockpiles of crude, gasoline and distillate fuels, as inventories are rising across the world.
Crude inventories rose by 15 million barrels to 518.6 million barrels in the week ending 17 April.
National Australia Bank Melbourne commodities research head Lachlan Shaw said: “As long as we have that inventory overhang in the market it is going to be difficult for crude prices to rally sustainably.”
Production cuts from OPEC+, a group including OPEC countries and other oil producing nations such as Russia, will take effect from 01 May.
The group has agreed to cut output by a record 9.7 million barrels per day (bpd), to counter the collapse of prices due to the outbreak that shred the demand.
Despite this being around 10% of global production, analysts have said these cuts may have to be extended to match the deficit in demand.