06.05.202010:39:00UTC+00Oil Extends Gains On Demand Hopes

Oil extended recent gains to rise above $31 a barrel on Wednesday as hopes for a recovery in vehicle traffic and fuel demand offset industry data showing a higher-than-expected rise in U.S. inventories.

Benchmark Brent crude rallied 1.7 percent to $31.48 a barrel, after having climbed 13.9 percent in the previous session.

U.S. West Texas Intermediate (WTI) crude futures were up as much as 3.35 percent at $25.41 a barrel, after having jumped more than 20 percent the previous day on optimism of the re-opening of the global economy.

Brent crude has almost doubled since hitting a 21-year low reached on April 22 amid expectations of a recovery in global oil demand as several countries around the world seek ways to reopen their economies and ease lockdown restrictions.

The improving demand outlook as well as optimism surrounding output cuts has supported the oil rally.

To tackle the resulting glut, OPEC and its allies have agreed to a record oil output cut of 9.7 million barrels per day, about 10 percent of pre-coronavirus demand.

Meanwhile, the American Petroleum Institute (API) report showed on Tuesday that U.S. crude inventories rose by 8.4 million barrels last week, as the demand destruction continues and storage space nears its upper limits.

Inventory data from the Energy Information Administration will be released later today.