Oil prices rose on Wednesday after data showed a rise in crude and fuel stockpiles in the United States, reviving concerns about oversupply and falling fuel demand in the world’s largest crude consumer amid the coronavirus outbreak.
West Texas Intermediate (WTI) futures grew $1.33, or 3.54%, to $39.71 a barrel, having risen about 2% in the previous session.
Brent crude futures rose $1.04, or 2.55%, to $41.86 a barrel after gaining nearly 1% on Tuesday.
Both contracts rose to their highest in three months on Monday but some analysts think the market has risen too far, too fast as the coronavirus pandemic sweeps across the world with new infections posting daily highs.
“While oil has rallied substantially last month, the market’s recovery from an historic crash remains fragile, with higher prices likely prompting producers to turn the taps back on even as the pandemic continues to quash energy demand,” said Avtar Sandu, senior manager commodities at Phillip Futures.
U.S. crude inventories climbed 8.4 million barrels in the week to June 5, API data showed, while a Reuters poll of analysts had indicated a draw of 1.7 million barrels.
Distillate fuel stockpiles, including diesel fuel and heating oil, rose by 4.3 million barrels, outpacing expectations for a 3 million barrel increase.
Official government figures on stockpiles from the Energy Information Administration are due later on Wednesday.
While layoffs fell in the U.S. in April, hiring hit a record low indicating it will take many years for a recovery in the labour market in the world’s biggest economy.
In Japan, the world’s second-biggest economy, machinery orders slumped in April at the fastest pace in two years, according to data released on Wednesday.
Still, the refinery run rate in the world’s fourth-biggest importer of oil, rose off more than 10-year lows last week to 54.5%, as economic activity picked up after the Japanese government lifted a state of emergency in late May.
Prices have been supported in recent weeks as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, put in place record production cuts that they extended on Saturday.
But Saudi Arabia, Kuwait and the United Arab Emirates said they would not continue further voluntary reductions of 1.18 million barrels per day.