Oil prices push higher despite unexpected surge in crude stocks
Oil prices pushed upwards today despite a larger than expected build in US crude stockpiles, holding on to the gains of the last few weeks.
Global standard Brent crude rose 1.5 per cent to $35.29, whilst US benchmark West Texas Intermediate picked up 1.9 per cent to reach $33.43.
The rise came despite US crude inventories increasing by 7.9m barrels in recent weeks, surpassing expectations, due to a surge in imports.
The increase marked a reversal of the downward trend of the last couple of weeks, with stocks beginning to decline as fuel demand slowly increased.
In conjunction with record production cuts and oil shut-ins around the world, this had stabilised prices after April’s period of historic volatility.
However, despite the tentative recovery, considerable anxiety remains over whether producers will continue to curb output to prop up the market.
Opec’s de facto leader Saudi Arabia has indicated that it is willing to extend its own cuts until the end of the year, but as yet there has not been any assurance from Russia that it will follow suit.
A failure of the two nations to agree to oil production cuts triggered a production war in March, flooding the market and contributing to the coronavirus-caused price collapse.
Opec and its allies in the wider Opec+ cartel are due to meet on 9 June to discuss extending the cuts.
Markets are also concerned that the US could hit China with further sanctions over its new security legislation for Hong Kong, which would further hinder the global economy’s recovery from the coronavirus crisis.