Oil prices jumped for a second day on Thursday, lifted by signs the U.S. crude glut is not growing as quickly as expected and clawing back ground at the end of a month of tumbles wrought by coronavirus fears that caused futures to plumb two-decade lows.
The more actively traded July contract was up $2.51 or 10.4%, at $26.74 a barrel.
West Texas Intermediate (WTI) crude was up 16.5%, or $2.48, to $17.54 per barrel. The U.S. benchmark surged 22% on Wednesday.
The increases are a modest but marked recovery from the nosedive of U.S. crude futures for May as much as $40 into the negative on April 20 – an unprecedented plunge below zero that traders had not previously believed possible.
Brent futures also tanked to below $20 a barrel.
U.S. crude inventories grew by 9 million barrels last week to 527.6 million barrels, Energy Information Administration data showed, below the 10.6 million barrel rise expected by analysts polled by Reuters had expected.
U.S. gasoline stockpiles fell by 3.7 million barrels from record highs the previous week, with a slight rise in fuel demand offsetting a rebound in refinery output.
“If we see a continuation of this trend in the coming weeks, it could suggest the worst might be behind the oil market,” ING’s head of commodities strategy Warren Patterson said.
Yet indicating the depth of the crisis hitting the industry, Royal Dutch Shell said on Thursday it was cutting its dividend for the first time since World War Two.
Storage concerns continue to weigh with the International Energy Agency saying global capacity could peak by mid-June.
“At around 80%-90% full, traders keep on seeing the storage glass as half empty when it is not even half full. It’s close to overflowing, even at a lower speed.” said Bjornar Tonhauge, Rystad Energy’s head of oil markets.
U.S. President Donald Trump said his administration would soon release a plan to help U.S. oil companies. Treasury Secretary Steven Mnuchin said it could include adding millions of barrels of oil to national reserves.
Western Europe’s largest oil producer, Norway, said it would lower output from June to December, cutting production for the first time in 18 years as it joined other major producers in action aimed at supporting prices and curbing oversupply.
- Reuters
