By Gina Lee
Investing.com – Oil was up on Wednesday morning in Asia after the American Petroleum Institute (API) estimated an almost 10-million-barrel build in crude oil inventories for the week ending April 24 overnight.
The 9.98-million-barrel build is smaller than API’s prediction of a build of 13.226 million barrels the week before. Meanwhile, the U.S. Energy Information Administration (EIA) estimated a 15-million-barrel build.
Brent oil futures rose 1.35% to $23.34 by 9:44 PM ET (2:44 AM GMT) and WTI futures jumped 12.40% to $13.87.
They rallied from a volatile previous session which saw WTI futures slump as much as 20%.
Some investors were cautiously optimistic that demand for the black liquid could slowly recover, as some countries slowly lift lockdowns put in place to curb the spread of the COVID-19 virus and try to get their economies running again.
“A ramp up in business activity will give a boost in US domestic oil demand, which can postpone filling the country’s oil storage a bit further in the future,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, told CNBC in an email.
But he was quick to warn that demand will continue to stay depressed.
“The U.S. reopening industrial activity can give a temporary boost to prices as traders need space to breathe, but we don’t expect the levels to last. Oil prices will likely average at 20 USD per barrel in the second quarter, with the lowest levels coming sometime in May.”
Other investors were quick to point out that more cuts need to be made by producers to avoid the inevitable oversupply.
“Despite the forthcoming OPEC+ production cuts, more production needs to be cut – particularly in the US and Canada to avoid tank tops by June,” S&P Global Platts’ global head of analysis Chris Midgley told CNBC in an email.