U.S. oil prices jumped to the highest level in month Tuesday, extending a one-week gain of around 87%, as investors bet that renewed demand for crude will support markets as economies around the world move to re-start activity following coronavirus lockdowns.
After trading in negative territory for the first time in history late last month, as investors dumped futures contracts at a substantial loss instead of taking physical delivery of crude that they had no place to store, oil prices have rallied hard on hopes that demand from re-starting economies, especially in China, will carve into historic losses in global commodity prices.
Italy, one of the worst-hit nations from the global pandemic, has allowed some smaller businesses to re-open, and construction projects to re-start, following nearly two months of government-ordered isolation.
Similar, yet tentative, moves have been announced in India, Thailand, France, Germany and the United Kingdom, while in the U.S., some 22 states are set to either lift of relax "stay-at-home" orders over the next ten days.
"Crude oil’s rally continue as more countries and regions move towards easing lockdowns while production cut announcements continue to emerge," said Saxo Bank's chief investment officer Steen Jakobsen. "Also supporting the market was a report from Genscape saying that the pace of stock build at the Cushing slowed last week. The futures market is looking beyond the coming weeks which remains challenging with regards to lack of storage. Instead focusing on the recovery phase."
Front-month WTI futures contracts for June delivery, the new benchmark for U.S. prices, were last seen $4.00 higher from their Monday close in New York and changing hands at $24.39 per barrel, the highest since April 8.
Brent futures for July delivery, which benchmark around 60% of global crude purchases, were marked $3.22 higher at $30.42 per barrel, the highest since late April.
Genscape, which track oil storage measurements, said Monday that inventories at the main U.S. delivery hub in Cushing, Oklahoma likely rose by 1.8 million barrels last week, the smallest increase since mid-March.
The American Petroleum Institute will publish its reading of domestic crude stocks later today, with an official assessment from the Energy Department tomorrow at 10:30 am Eastern time.