Oil prices reasserted themselves on Wednesday on signs of improving demand and a drawdown in U.S. crude inventories. However, worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains.
West Texas Intermediate July crude futures were up $1.22, or 3.8%, at $33.17 U.S. per barrel. Brent crude futures were up $1.05, or 3%, at $35.70 U.S. per barrel.
The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero.
Data from the U.S. Energy Information Administration showed inventory dropped by five million barrels for the week which ended May 15. Estimtes had analysts expecting a build of 1.8 million barrels.
Loosening of lockdown restrictions worldwide are supporting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far.
U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed on Tuesday.
Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.
