Oil prices edged higher on Thursday on a surprising rise in China’s April exports, US output cuts and the slow return of some activity in Europe.
Brent crude was up by 52 cents, or 1.75 per cent, to $30.24 a barrel by 1023 GMT, after dropping 4 per cent on Wednesday.
US West Texas Intermediate futures rose 47 cents, or 1.96 per cent, to $24.46 a barrel. WTI rose $1 in early trade after having declined more than 2 per cent in the previous session.
“Brent is trying to go back to early April levels, the market is testing the capacity of Brent to stay above $30 a barrel,” Olivier Jakob of Petromatrix consultancy said.
“We’re out of the super contango now. Refinery runs are coming back, the US is cutting production so this is providing support.”
However, a mismatch between demand and supply remained, despite a rebound from dire figures in the physical market.
“A shift in market sentiment was lifting prices earlier this week, but the physical overhang does not want to go away just yet,” Citi Research said.
China was a bright spot in terms of demand last month. Imports climbed to 10.42 million barrels day (bpd) in April from 9.68 million bpd in March, according to Reuters calculations based on customs data for the first four months of 2020.
Overall exports from China also rose against expectations of a sharp drop, though a big drop in total imports suggested any recovery is some way off as economies around the world fall into recession, meaning demand for fuels will likely remain subdued at best.
“Oil prices should eventually settle on a wide $10 range, with WTI crude’s upper boundary being around the $30 a barrel level, while Brent crude targets the $35 a barrel level,” said Edward Moya, senior market analyst at OANDA.
US crude inventories were up for a 15th straight week last week, rising by 4.6 million barrels, the Energy Information Administration said on Wednesday.
That was less than analysts had forecast in a Reuters poll, which suggested a 7.8 million-barrel rise but the gain highlighted once again how much supply is being stored. Distillate inventories also rose sharply.
Gasoline stocks, however, fell for a second week as some US states eased lockdowns that had sharply hit traffic.
Also capping prices were indications that Iraq, OPEC’s second-largest producer after Saudi Arabia, has not yet informed customers of impending restrictions on its oil exports.
OPEC and allied producers – a grouping known as OPEC+ – agreed to cut production from May 1 by around 10 million bpd to stabilise prices amid the plunge in demand in economies ravaged by the coronavirus outbreak.