Oil prices strengthened further early Friday with intimations of improving demand from China as the world’s most populous country continually relaxed movement restrictions from the coronavirus plague.
There is optimism that the development will stimulate efforts at reducing the massive storage trouble in the global market by depleting crude supply.
Brent crude, Nigerian oil grades benchmark, had notched up 1.3% or 39 cents to reach $31.52 per barrel at 04:33 West African Time, having gained as much as 7% on Thursday. The benchmark is approaching its third weekly gain in a row with 1.8% appreciation already.
U.S. West Texas Intermediate (WTI) went up by 0.7% or 19 cents, climbing to $27.75 per barrel after adding up 9% at Thursday’s session.
The benchmark is also drawing near to its third weekly rise with 12% already in the bag.
Nigeria’s Bonny Light closed Thursday’s session higher, appreciating by 3.18% or 83 cents to $26.96.
Output cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies are also encouraging demand.
“Data released on Friday showed China’s daily crude oil use rebounded in April as refineries ramped up operations,” Reuters said.
A dramatic recovery is not expected given that the fresh cases of the virus have been recently reported in some nations that have eased lockdowns.
“The fundamentals in the market are clearly improving. But we still believe that in the near term, the upside is limited given that we are still in a surplus environment … There is plenty of inventory for the market to digest,” a note by ING Research said.
The International Energy Agency envisages that oil stocks will crumble by roughly 5.5. million barrels per day between June and December.
It said on Wednesday that U.S crude storage dropped for the first time in 15 weeks.