Oil prices are heading for gains for the second week, after low levels reached in April, amid signs of a return in demand with a number of governments going to ease the closures imposed to curb the outbreak of the new Corona virus.
The price of US West Texas Intermediate oil in trading today rose more than 4.5% to $ 24.99 a barrel, before retreating slightly during trading. American crude posted gains of about 25% this week.
The price of Brent crude rose 3.1% and was trading at $ 30.38 a barrel, and it recorded an increase of about 15% this week.
Oil markets were hit in April, at a time when the Coruna virus strangled demand due to the closure of commercial activities and travel restrictions. And American crude fell for the first time to below zero.
But markets began to improve this week with the commencement of easing quarantine measures in countries from Asia to Europe, after it had passed the peak of the epidemic.
This improvement is attributed to an agreement between the major producers to reduce production by about ten million barrels per day, which began implementation on the first of May this year.
Compounding the improvement in the markets was Saudi Arabia's announcement on Thursday that it would raise the prices of nearly all oil grades for June shipments, indicating its desire to raise prices.
Warnings
But analysts warn that the recovery will be gradual at a time when investors seek to know the speed of the return of demand for oil after an abrupt halt to global economic activities.
"People are back in their cars to move around or just leave the house, and this is excellent for gasoline demand, as it provides the first stage in the recovery of oil prices," said Stephen Ennis, analyst at Axecorp.
"But in order to maintain this recovery, we need more than people driving their cars in their neighborhoods. We need industrial engines as they fly at full strength, and planes fly in the air."
Today, Australia is the latest country planning to ease restrictions on public isolation, as cases of coronavirus have slowed to a minimal level, aiming to ease restrictions on social separation in a three-stage process.
France, parts of the United States and countries like Pakistan also intend to ease restrictions that have been established to stem the spread of the world's worst health crisis in a century.
In the United States - the world's largest consumer of oil and its products - motorists are starting to return to the roads again with the easing of public isolation measures.
Gasoline supplies to the US market increased to nearly 6.7 million barrels per day last week, according to estimates from the US Energy Information Administration.