On Tuesday, oil prices rebounded as US crude oil futures turned positive after trading below USD0 for the very first time. However, increases were capped by the gloomy demand outlook on the back of coronavirus pandemic.
With May delivery contract is expiring on Tuesday, US WTI for the month’s delivery rose by USD1.10 to USD38.73/barrel by 01.17 GMT after went down to USD37.63/barrel in the previous session.
Brent crude futures for June delivery rose by 1.9% or 49 cents to USD26.06/barrel while the US WTI for June contract was maintained at USD20/barrel, seeing a moderate increase after rolling over in May.
Analysts viewed that the gains were capped by the supply glut in the US and the lack of storage capacity, even when the Organization of the Petroleum Exporting Countries and its non-member oil producer allies (OPEC+) have agreed to slash oil output by 9.7 million bpd.
The cut would only happen starting May and many deemed the size is not significant enough to restore the balance in the market.
According to a Reuters poll, US crude inventories may rise by around 16.1 million barrels last week. Gasoline inventory is predicted to climb by 3.7 million barrels in the week to April 17.
To aggravate the outlook, the US storage hub in Cushing, Oklahoma, is expected to be filled up in the next few weeks.
