Oil up on back of decreased supply
LONDON, May 7, 2020 – Oil was up on Thursday morning in Asia, clawing back a small part of its losses from the previous session.
Brent oil futures inched up 0.81% to $29.95 by 9:22 PM ET (2:22 AM GMT) and WTI futures gained 1.46% to $24.34.
WTI futures came off an especially volatile session, swinging between gains of more than 6% and losses down to 8%. With the June contract set to expire on May 19, investors continue to monitor the futures’ movements.
Meanwhile, Brent futures lost 4% on Wednesday.
The black liquid was buoyed by the US Energy Information Administration (The EIA) saying overnight that crude inventories for the week ending May 1 rose by 4.59 million barrels. The build was smaller than the analyst predictions of a 7.759-million-barrel build in a forecast prepared by Investing.com.
EIA also said that crude oil production dropped by 200,000 bpd to 11.9 million bpd as OPEC+ and companies such as Exxon (NYSE:XOM) and Chevron (NYSE:CVX) cut production. While production is 1.2 million barrels less than March’s record number of 13.1 million bpd, worries persist that the cuts are not enough as storage spaces continue to fill up at alarming speed.
With some countries easing their COVID-19 lockdowns at the beginning of the week, demand is slowly recovering but not quickly enough.
“Indications show that for yet another week, storage is continuing to fill up, despite the shut-ins and the output cuts,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, told CNBC.
“Demand, which indeed now is on the recovery road, is not yet enough to balance the produced oil and that oil has to go somewhere,” he added.
By Investing.com: https://www.investing.com/news/commodities-news/oil-upon-back-of-decreased-supply-but-investors-continue-to-warn-ofoversupply-2163522