By Gina Lee
Investing.com – Oil was up Wednesday morning after investors breathed a sigh of relief after the last day of the WTI futures June contract on Tuesday closed without incident.
Brent oil futures gained 0.84% to $34.76by 9:41 PM ET (2:41 AM GMT) and WTI futures gained 0.16% to $32.01, recovering some of its losses from earlier in the session.
Oil rose in the previous session after the American Petroleum Association reported a surprise crude inventory draw of 4.8 million barrels for the week ending May 15 on Tuesday. Analyst forecasts prepared by Investing.com had predicted a 2.4 million-barrel build.
Some investors were optimistic that production cuts implemented by OPEC+ and some American producers since May are finally making a dent in the global oversupply.
A group of producer countries led by Saudi Arabia have also pledged further cuts starting in June.
“The market sees both forces aligning: the cuts OPEC+ promised are materializing and other non-member production shut-downs are also really helping to limit the oversupply. Meanwhile, lockdown measures are removed globally, and the economy needs fuel to restart,” Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy, told CNBC.
But with a global struggle to restart economies shut down by the COVID-19 virus, and some countries such as China and South Korea struggling to contain a second wave of cases, other investors struck a more cautionary note.
Countries such as Brazil and India are also experiencing an explosion of cases, with the number of global cases fast approaching 5 million according to Johns Hopkins University data.
Consultants the Eurasia Group told CNBC, “A global recession, cautious consumers, and a later and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia” warranted caution on expectations for a quick demand recovery.