Oil prices have risen in Thursday trading as oversupply fears subside and lockdowns begin to ease.
By mid-afternoon trading, both Brent crude oil futures and West Texas Intermediate crude oil have gained by 4.15 per cent, standing at $30.40 and $26.34 per barrel respectively.
Indices in Asia, Europe and North America have fallen on Fed Chair Jerome Powell’s warning of an “downturn are without modern precedent” to be followed by an “extended period” of weak economic growth.
However, sentiment in the oil market has been buoyed by both the International Energy Agency (IEA) and Goldman Sachs (GS).
On Thursday, while it maintained that oil demand for the whole of 2020 would witness a record drop, the IEA reduced its dire predictions, citing the easing of lockdown measures and gradual reopening of multiple key economies. The body now expects crude stockpiles to shrink by 5.5 million barrels per day in the second half of the year.
Fears of a second wave of the novel coronavirus and reports of new outbreaks in China and South Korea have spooked some oil investors, however, although others have pointed to the growing confidence of Goldman Sachs.
The investment bank stated: “We believe that the next stage of the oil market rebalancing will be one of range-bound spot prices with the most notable shifts being a decline in implied volatility as well as a continued flattening of the forward curve without long-dated prices rising yet,” it said.
Such comments, coupled with Goldman raising their May global oil demand estimate by 1.4 million barrels per day, have reassured investors and traders that another dramatic plunge as witnessed earlier this year will most likely not reoccur.