Oil prices rose on Friday and were on course for a second consecutive week of gains as more countries moved ahead with plans to relax economic and social lockdowns put in place to halt the coronavirus pandemic and as more output was shut in.
U.S. West Texas Intermediate crude gained 5%, or $1.18, to trade at $24.73 per barrel, while international benchmark Brent crude traded 2.9% higher at $30.32 per barrel.
Both contracts are heading for a second week of gains after the lows of April, when U.S. oil crashed below zero, with Brent advancing over 14% this week and WTI up more than 22%.
However, crude is still being pumped into storage, raising the prospect that any gains prompted by stronger demand will be capped.
“The market remains very oversupplied, but OPEC+ cuts and voluntary curtailments are helping and the modest beginnings of demand recovery could be imminent as lockdowns begin to ease,” said Jefferies equity analyst Jason Gammel.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group know as OPEC+, began implementing a deal on record supply cuts amounting to 9.7 million barrels per day (bpd) from the start of May.
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North American oil companies are cutting production quicker than OPEC officials and industry analysts expected and are on track to withdraw about 1.7 million bpd of output by the end of June.
Inventories
Still, U.S. crude inventories at the Cushing storage hub in Oklahoma increased by about 407,000 barrels in the week through May 5, traders said on Thursday, citing Genscape data.
“Price-wise, we still expect to see some mild (if not wild) price swings as the traders get bullish on shut-ins and then again bearish on the stock builds that continue to pile up,” said Rystad Energy oil markets analyst Louise Dickson.
Australia on Friday became the latest country to plan an easing of lockdown restrictions as infections from the coronavirus slow to a trickle, aiming to relax social distancing restrictions in a three-stage process.
France, parts of the United States and countries such as Pakistan are also planning to ease restrictions instituted to stop the spread of the world’s worst health crisis in a century.
In the United States, the biggest oil and oil products consumer, motorists are starting to take to the roads as the lockdowns ease. Gasoline supplied to the U.S. market rose to almost 6.7 million bpd last week, according to estimates from the U.S. Energy Information Administration.
Prices received further support after U.S. and Chinese officials discussed a trade deal agreed before the coronavirus outbreak, with both sides agreeing to implement the agreement.
