Oil has soared on hopes that demand will slowly return as major producers continue to cut production in order to combat a global glut.
On Wednesday, West Texas Intermediate futures rose 22 percent. Based on figures by the U.S. Energy Information Commission, fuel stocks decreased by 3.67 million barrels compared to an estimated buildup of almost 2.5 million. Weekly supplied gasoline, a measure of demand, grew by 549,000 barrels per day, the most since May.
As global supply cuts deepened and signs of a turnaround in physical markets appeared, the oil climbed for the second day. Prices have stabilized slightly, but so far they remain substantially down year to date.
In wild trading Thursday, New York's futures jumped as much as 29 per cent. Royal Dutch Shell Plc said upstream oil and gas production could drop by as much as a third while ConocoPhillips said in June it would slash output by more than 400,000 barrels a day.
Norway has said production will be cut by 250,000 barrels a day in in the same month, and 134,000 barrels in the second half of the year.
Worldwide demand for fuel shrank in April at around 30 percent. Even after large oil suppliers led by Saudi Arabia agreed to cut output by almost 10 million barrels per day, U.S. crude futures ended at a record low in negative territory on April 20.
The huge drop in U.S. West Texas Intermediate futures made traders frenzied to stop distribution as the contract ended in the first month, forcing sellers to pay $37.63 a barrel at delivery to get rid of their deals.
Major countries are on the move to lift the most rigorous lockdown policies for coronavirus. Several US states are taking steps such as reopening non-essential stores, while similar steps are being taken in some European countries. This reopening has boosted optimism and generated expectations that the market for oil will possibly increase in the coming weeks.
In addition, prices surged on reports that demand for oil storage is falling off recent peaks. A US Energy Information Administration report on Wednesday saw oil inventories increasing by nine million barrels last week, slightly lower compared to analysts' rising estimate of 10.6 million barrels.
Companies in the shale-rich Permian Basin, and elsewhere in the U.S., will slash production by around 2 million barrels per day starting next month, said Marco Dunand, chief executive of Mercuria, in an interview.
Russian oil firms will decrease production from February rates by around 19 percent, the country's energy minister Alexander Novak told Interfax news agency.
