The rebound of crude oil prices in the oil market continued for the second consecutive day, as oil prices went up on Wednesday. This is based on a spate of relatively positive news from the oil market and signs that oil demand is beginning to recover in the world’s biggest economies.
One of the positive news in the oil market is the report from the American Petroleum Institute (API), that crude storage rose by 10.6 million barrels as against the 13.2 million barrels that were projected. This shows an almost 3 million per barrel reduction, probably a sign that the glut might be easing off.
The market reacted positively to the news on Wednesday, as the American WTI went up by 7.5% and it sold for $16.19 per barrel. The Brent crude jumped up by 3.9% at $23.42 per barrel and Nigeria’s headline crude, Bonny light, rose by 11.18% at $16.51 per barrel.
Some countries and parts of the US are already beginning to lift travel restrictions, though against medical advice in some cases. The market expects higher oil demand from the relaxation of the travel restrictions.
According to a report from oilprice.com, Bjomar Tonhaugen, Head of Oil Markets at Rystad Energy, said:
“Such development could indeed bring some oil demand back, but not that much for the hardest hit road fuels yet as travel restrictions remain.
“Again, intentions are not actions yet, but they are enough to get trading going, as market participants do not want to miss the positive sentiments in case these hopes materialize.”
After weeks of dismal news, the prospect of a better than expected future for the oil market seems positive. But there is still a long way to go, as opening up, economies too soon could lead to a spike in the virus.
Despite the likely rebound in oil demand, there is still a massive global glut of oil that will need to be cleared before there can be any meaningful price recovery. The global oil demand might take a while to recover.