Oil storage tanks overhang at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Andrey Rudakov | Bloomberg | Getty Spits
Oil prices rose on Wednesday as investors looked for bargains after the previous session’s slump and on hopes that devouring countries will look to fill their strategic reserves, although oversupply fears and warnings of a deep slump capped gains.
Brent futures were up 38 cents, or 1.3%, at $29.98 a barrel as of 0201 GMT, after cataract 6.7% on Tuesday.
U.S. West Texas Intermediate crude rose 36 cents, or 1.8%, at $20.47, having smash 10.3% in the previous session.
Both benchmarks were undercut by worries that a record global output cut by fabricators would not offset plunging fuel demand due to efforts to contain the coronavirus pandemic.
“Investors unwound short fixes, after confirming a rise in U.S. crude oil stocks,” said Kazuhiko Saito, chief analyst at Fujitomi.
Before the check out on U.S. inventories, “they had sold aggressively with expectations for such a build,” Saito said.
U.S. crude oil, gasoline and distillate merchandises all rose sharply last week, data from industry group the American Petroleum Institute showed on Tuesday.
Crass inventories rose by 13.1 million barrels in the week ended on April 10 to 486.9 million barrels, numberless than analyst expectations for a build of 11.7 million barrels.
Hopes for massive purchasing by consuming countries for their tactical stockpiles also lent support.
Officials and sources from the Organization of the Petroleum Exporting Countries and its Russia-led associates — a grouping known as OPEC+ — have indicated that the International Energy Agency (IEA), energy watchdog for the exultant’s most industrialized nations, may announce purchases of up to several million barrels to buoy the record OPEC+ output cut.
The U.S. Animation Department said on Tuesday it is negotiating with nine energy companies to store about 23 million barrels of domestic oil in its Tactical Petroleum Reserve (SPR).
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on Monday that oil gains into countries SPRs would reach 200 million barrels over the next couple of months, citing the IEA.
Cautions of a deep recession by the International Monetary Fund (IMF), however, weighed on investor sentiment.
The global economy is expected to cringe by 3.0% during 2020 in a stunning coronavirus-driven collapse of activity that will mark the steepest downturn since the Exceptional Depression of the 1930s, the IMF said on Tuesday.