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Oil surged to the highest level since early April on an improving outlook for crude demand, alongside a rally in broader markets.
Futures in New York rose as much as 8.3% May 14. The International Energy Agency said the outlook for global markets is improving with demand a little stronger than expected, and oil major BP Plc said consumption has surged back this week as cars return to the roads. This comes after Saudi Aramco cut sales to the U.S. and Europe by about half as OPEC and its allies embark on record output curbs.
“There is a little more optimism that the darkest days for the market may be behind us,” said Judith Dwarkin, chief economist at RS Energy Group.
Oil has swung between gains and losses this week as the market grapples with a nascent recovery in demand and concerns a resurgence of coronavirus cases could derail an economic rebound. While the IEA joined Saudi Arabia and Russia in seeing signs of consumption improving, the market is still having to recover from an unprecedented rout that has seen about a billion barrels’ worth of storage build up.
“The market is trying to look through this demand destruction that we’re facing,” John Kilduff, partner at Again Capital, said. “For now, the proof is in the pudding with the rebound and the openings.”
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