2020.05.1410:10:00UTC+00Oil Prices Rally On US Stockpile Drop

Oil prices rose sharply on Thursday, with an unexpected drop in U.S. crude stocks and an IEA forecast for lower global stockpiles in the second half boosting sentiment.

Benchmark Brent crude jumped over 4 percent to $30.38 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were up as much as 5.3 percent at $25.62 a barrel.

Data released by the Energy Information Administration (EIA) on Wednesday showed U.S. crude stockpiles declined by 745,000 barrels last week, as against expectations for over 4 million-barrel rise.

The EIA data also showed stocks in the storage at Cushing, Oklahoma, fell by 3 million barrels last week.

The EIA expects global energy demand to drop by 8.1 million barrels per day this year to 92.6 million barrels per day, but added it expects crude output in the U.S. to drop by 540,000 barrels per day, higher than an earlier forecast for a 470,000 barrels per day drop.

Prices have ticked up in the past two weeks amid hopes for a pickup in fuel demand after some countries relaxed coronavirus restrictions and lockdowns.

Renewed outbreaks in Germany, China and South Korea fueled fears of a second wave of virus infections, keeping gains in check.

On Wednesday, Fed Chair Jerome Powell warned of a prolonged recession from the viral outbreak and urged Congress and the White House to act further to counter what is likely to be a severe downturn.

Powell also said that negative interest rates are not under consideration, but the Fed will continue to use all tools to their fullest until the crisis has passed and the economic recovery is well under way.