Oil prices gained double-digit increases on Wednesday, driven by a slow-than-expected build in US crude oil inventories and an unexpected draw in gasoline stockpiles as well as optimism that fuel demand would recover as some American states and European countries eased coronavirus-related lockdowns.
Data from the US Energy Information Administration (EIA) showed that crude oil inventories in the country rose by 9 million barrels last week. The build was smaller than the 10.6 million-barrel increase estimated by analysts in a Reuters poll. EIA data also showed a surprising drawdown in US gasoline stocks of 3.7 million barrels.
US crude stockpile, however, reached 527.6 million barrels, just 7 million barrels away to hit its record-high. US crude storage continues to fill rapidly, but output reduction by US shale producers shall slow down the flow to tanks. Industry analysts estimated US shale producers to have cut supply by 300,000 bpd.
Prices also received a boost from optimism that fuel demand would recover soon. European countries, including France, Italy, and Spain planned to lift some lockdown restrictions to revive the economy. Several US states also planned to do the same thing.
The international benchmark Brent crude futures were up $2.08 (10.2%) to $22.54/barrel, while US WTI crude futures surged $2.72 (22%) to $15.06/barrel. Crude prices have been volatile this month, plunging roughly 30% amid efforts to curb the COVID-19 pandemic. Last week, WTI futures collapsed to negative territory for the first time in history.
