Oil prices bounced back from near 2-decade lows in the previous session on Thursday as rising US crude stocks are seen as a signal that producers have little option but to deepen production cuts while the coronavirus pandemic destroys demand.
The international benchmark Brent crude LCOc1 gained 69 cents (2.5%) to $28.38/barrel as of 0102 GMT, while US WTI rose by 56 cents (2.8%) to $20.43/barrel. On Wednesday, Brent fell by more than 6%, and WTI dropped to its 18-year lows after official data showed a record build in US crude oil inventories.
At the same time, the International Energy Agency (IEA) said that global oil demand would decrease by 29 million bpd in April to the lowest in 25 years. The figure is much higher than the planned 20 million bpd output cuts by the world’s major oil producers.
According to Stephen Innes, chief global markets strategist at AxiCorp, a large storage build giving support to prices was counterintuitive, but the build foreshadows that producers will close more wellheads. Last week, the US Energy Information Administration said production in the country is forecast to plunge by 470,000 bpd.
