Oil rose on Thursday after sharp losses incurred in the previous session on hopes that a significant increase in US stocks may mean that producers have little choice but to deepen production cuts as the Corona Virus pandemic crushes demand.
With the release of official data showed that US crude inventories rose by the largest amount ever, US Texas West crude fell Wednesday to its lowest level since February 2002, while Brent crude fell more than six percent.
Brent crude rose 36 cents, or 1.3 percent, to $ 28.05 a barrel by 0502 GMT. US West Texas Intermediate crude rose ten cents, or 0.5 percent, to $ 19.97.
Fears of a weakening demand dampened gains as the benchmarks, trading more than 2.5 percent earlier in the session, were traded.
The US Energy Information Administration data also showed a significant increase in refined fuel stocks in the United States, although refineries operate at a capacity of 69 percent across the country, the lowest level since September 2008.
The data comes after a report by the International Energy Agency expected oil demand to drop by 29 million barrels per day in April to reach its lowest level in 25 years, which is just under 30 percent of global demand before the outbreak of the Corona virus.
This figure is higher than the impending production cuts. The Organization of Petroleum Exporting Countries (OPEC) and allied producers, including Russia, in what is known as the OPEC + group, agreed to reduce production by 9.7 million barrels per day, while it is hoped that other countries, including the United States, will reduce production by another ten million barrels per day, which will reduce production. To 20 million barrels per day.
Last week, the Energy Information Administration said that US production is expected to drop 470,000 bpd.
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