With the slowdown in a supply glut and improvement in oil demand, due to easing of lockdowns in economies across continents, the rebound in the global oil market seems to have continued.
Oil prices went up again on Tuesday, based on hopes for a recovery in oil demand and economic activities, as Brent crude inched towards the $30 mark.
According to information obtained from oilprice.com, the Brent crude shot up to $29.30 per barrel as on Tuesday afternoon. The American headline crude, West Texas Intermediate (WTI) surged 8.30$ to sell at $24.67 per barrel. This makes it the fifth session in a row that WTI has risen.
The Nigerian headline crude, Bonny Light, also moved up slightly to sell at $18.94 per barrel.
The expectation for fuel demand has gone up, as some U.S states and several countries in Europe, Asia, Africa and others are gradually easing the lockdown.
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In addition, it appears that the storage capacity crisis is easing off, so the price rally that is being experienced is likely to extend further in May. The inventories rose by only 1.8 million barrels per day last week, which if confirmed, would represent the smallest increase since mid-march.
This shows that the supply glut is gradually starting to ease. It also demonstrates just how sensitive the market has become to any change from the prevailing narrative in which global storage space could potentially fill as soon as late May, early June.
According to some analysts and the International Energy Agency (IEA), the global oil demand plunged by almost 30% in the month of April, but recovery is expected to be slow, especially with the continued shutdown of airports and flight operations.
With the output cut by OPEC+ and top oil producers being effective from May 1, the oil market crisis is expected to be gradually easing off.