The Wall Street Journal reports that oil demand is rising again as the world reopens after its coronavirus induced shutdown, writing:
Oil consumption is rising again in those parts of the world emerging from coronavirus lockdowns, helping to alleviate a global glut and rebalance a market stymied by months of low demand and a devastating rout that saw prices drop as much as two-thirds this year.
Green shoots of an oil recovery are sprouting with regions of China attempting a semblance of normal life as lockdowns are eased and parts of Europe and the U.S. allow businesses to reopen.
“We see early signs of a gradual rebalancing of oil markets. It is still gradual and it is still fragile,” said Fatih Birol, the International Energy Agency’s executive director. This year will still be the worst on record, he added.
The world is expected to consume 21.5 million fewer barrels a day this month compared with a year ago, the IEA said in its monthly oil report Thursday.
Brent crude oil gained 6.6% to close at $31.13 a barrel on Thursday and West Texas Intermediate futures for June delivery rose 9% to $27.56. The WTI July contract gained 8.6% at $27.88 a barrel. Both Brent and WTI remain more than 50% below their late-2019 levels.
The easing of restrictions coincides with massive, coordinated production cuts from oil-producing nations including Saudi Arabia, Russia and the U.S. As a result, global onshore oil inventories, which had been rising continuously since the beginning of the pandemic in January, fell by 2.2 million barrels in the week to May 8, according to commodities analytics company Kpler.
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