Oil prices rise on early signs of slowing U.S. glut build

By Sonali Paul
MELBOURNE, April 30 (Reuters) - Oil prices rose on Thursday,
building on big gains in the previous session on signs the U.S.
crude glut is not growing as fast as expected and that gasoline
demand battered by COVID-19 restrictions is starting to pick up.
West Texas Intermediate (WTI) crude CLc1 futures climbed
to a high of $16.25 a barrel and were up 7.2%, or $1.08, at
$16.14 at 0147 GMT. The U.S. benchmark surged 22% on Wednesday.
Brent crude LCOc1 rose 3.9%, or 88 cents, to $23.42 a
barrel in light trading, with the June contract expiring on
Thursday. The contract hit a high of $23.65 in early trading,
having posted a 10% gain on Wednesday.
The May WTI contract plunged to historic lows below zero
last week, but recovered the next day to expire at $10.01 a
barrel. The June contract for the U.S. benchmark is now holding
above $16 a barrel, and market strategists said while the market
is likely to remain volatile, it may have found a floor.
"I think we're closer to an equilibrium price for WTI
between $15 and $20. That reflects all of the known knowns - the
demand destruction that has led to storage filling up and
pending supply cuts," said Michael McCarthy, chief market
strategist at CMC Markets and Stockbroking in Sydney.
U.S. Energy Information Administration data on Wednesday
showed U.S. crude oil inventories grew by 9 million barrels last
week to 527.6 million barrels, well below the 10.6
million-barrel rise analysts polled by Reuters had expected.
EIA/S
U.S. gasoline stockpiles notably fell by 3.7 million barrels
from record highs the previous week, with a slight rise in fuel
demand offseting a rebound in refinery output. The dual moves
hinted of a pick-up in fuel demand that has been smashed by
lockdowns to curb the novel coronavirus.
"There are increasing signals that perhaps the worst is
behind us," said Lachlan Shaw, head of commodity research at
National Australia Bank.
Comments from the Trump administration raised hopes for more
supply to exit the market and bolster the output cuts planned by
the Organization of the Petroleum Exporting Countries (OPEC) and
other major producers. Treasury Secretary Steven Mnuchin said
the government was exploring options "to store another several
hundred million barrels" of oil. He did not say, though, where the administration might find
that storage space. U.S. private storage is already approaching
full capacity and the government's Strategic Petroleum Reserve
hold only 78 million barrels of spare capacity.