Oil prices rise amid early signs of fuel demand picking up

Oil prices jumped on Thursday, buoyed by signs that the U.S. crude glut is not growing as quickly as expected and that fuel demand battered by COVID-19 restrictions is starting to pick up.

West Texas Intermediate (WTI) crude futures climbed to a high of $17.75 a barrel and were up 9.2%, or $1.39, at $16.45 at 0640 GMT. The U.S. benchmark surged 22% on Wednesday.

Brent was up 5.6%, or $1.27 at $23.81 a barrel in light trading, with the June contract expiring on Thursday. The contract hit a high of $25 earlier in the session, having posted a 10% gain on Wednesday.

The most active Brent crude contract for July was up $1.15 or about 5%, at $25.38 a barrel.

“WTI could quickly move to $20 a barrel and Brent to $30 a barrel in this environment,” said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

“In the context of the size of the overall decline in oil prices since the pandemic began, the recovery is still minuscule,” he added. “No one should mistake this week’s rallies as the beginning of the end of the destruction wrought in the world’s energy markets.”

Global energy demand could slump by a record 6% in 2020 due to economic lockdowns from the coronavirus pandemic, the International Energy Agency (IEA) said on Thursday.

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