Crude oil prices rose sharply and settled at 6-week high on Thursday, on hopes energy demand will see an increase as some states in America are opening up their businesses.
The International Energy Agency’s forecast that global stockpiles will drop in the second half of 2020, amid the ongoing and proposed production cuts by leading crude manufacturers contributed as well to oil’s rise.
West Texas Intermediate Crude oil futures for June ended up $2.27, or about 9%, at $27.56 a barrel, the highest close for a front-month contract since April 3.
Brent crude futures moved up $1.94, or about 6.7%, to settle at $31.13 per barrel today.
Despite Federal Reserve Chairman Jerome Powell’s warning that the economy could see the most severe downturn since the Great Depression, due to the coronavirus pandemic, and data showing jobless claims remaining at very high levels, oil prices moved higher today.
According to the data released by Energy Information Administration on Wednesday, crude stockpiles in the U.S. dropped for the first time in almost 2 months last week, falling by 745,000 barrels.
Today, the International Energy Agency said it expects crude demand to drop significantly this year, although it lowered its estimate for the decline thanks to easing of lockdown restrictions.
The IEA expects crude inventories to drop by about 5.5 million barrels per day in the second half of 2020.
The OPEC, for its part, said on Wednesday that oil demand may shrink by a little over 9 million barrels per day.