Oil prices were on the rise on Tuesday amid optimism as many countries announce and implement measures to end their lockdowns.
Moving out of lockdown is seen as an encouraging sign for the resumption of oil consumption, which has been hard hit by the new coronavirus (Covid-19) pandemic.
Optimism of a global “return to normal” is supporting crude oil prices, said Naeem Aslam of Avatrade, taking as examples countries like Italy and Spain, that are moving out of lockdown, and the United Kingdom, whose Prime Minister Boris Johnson reportedly wants to announce plans to move the UK out of lockdown at the end of the week.
At around 09:20 GMT (11:20 Belgian time), a barrel of North Sea Brent for delivery in July was worth $29.05 in London, up 6.80% from Monday’s close.
In New York, WTI’s U.S. barrel for June was up 8.93% to $22.21.
The day before, oil prices had finished higher for the fourth trading day in a row.
Some 15 European states, including Belgium, have taken measures to ease out of lockdown on Monday.
“The worst may be over for oil,” Aslam added, thanks in particular to “more or less voluntary reductions in supply” and a “demand curve that could be reversed.”
That said, the idea that we will be travelling as much as before is “fanciful, at least in the short term,” according Neil Wilson of Markets.com.
The market balance is also subject to significant efforts on the supply side. Since Friday, members of the Organization of the Petroleum Exporting Countries (Opep) and their main partners will withdraw 9.7 million barrels per day (mbd) from the market in order to stabilize prices.
This exceptional measure, which is to be gradually eased from July onwards, is intended to relieve a market suffocated by oversupply and storage close to saturation with the fall in consumption linked to the coronavirus pandemic.