Oil extended gains on Thursday amid signs that producers are cutting production to cope with a collapse in demand for fuel as the coronavirus outbreak ravages the world’s economies.
U.S. West Texas Intermediate (WTI) futures were up $2.82, or more than 19%, at $17.15 a barrel, having risen around a fifth in the previous session. U.S. crude futures fell to below minus $40 on Monday on concerns that buyers were running out of storage space to take deliveries.
Brent crude was up $1.18, or 5.84%, at $21.97 a barrel by 0254 GMT after rising more than 5% on Wednesday.
In the United States, the world’s biggest oil producer, Oklahoma’s energy regulator said companies could shut wells without losing their leases, an initial victory for struggling U.S. producers seeking relief from the market crash after a surge in production. The state is the fourth-largest oil producer in the U.S.
As oil consumption collapses, the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, are set to cut supply by a record 9.7 million barrels per day (bpd) from May 1. Those cuts may have to be extended to match the shortfall in demand, analysts said.
Loadings of Russia’s Urals crude grade from the Baltic Sea in the first 10 days of May are set to be 36% lower than the same period in April, indicating the country is complying with the cuts.
U.S. stockpiles of crude, gasoline and distillate fuels rose last week as inventory are building around the world, the Energy Information Administration said on Wednesday.
Crude inventories rose by 15 million barrels in the week to April 17 to 518.6 million barrels, near a record of 535 million barrels set in 2017.
Inventories are expected to keep rising, due to the collapse in demand from the viral outbreak and an aggressive response by refiners to cut processing.
In Japan, the world’s third-biggest economy, data released on Thursday showed services shrank at the most on record while manufacturers also shut down operations.
The coronavirus sweeping across the world has infected more than 2.5 million people and killed nearly 180,000 people, forcing governments to impose strict lockdowns and shutter industries while pushing central banks unleash unparalleled stimulus.