Crude oil futures gain as signs of demand recovery emerge

Singapore — 0218 GMT: Crude oil futures were higher in mid-morning trade in Asia Thursday as signs of a recovery in demand start to emerge this week.

At 10:18 am Singapore time (0218 GMT), ICE Brent June crude futures were up $1.24 cents/b (5.5%) from Wednesday's settle at $23.78/b, while the NYMEX June light sweet crude contract was $1.29/b (8.57%) higher at $16.35/b.

The US Energy Information Administration data released Wednesday showed a rebound in refined product demand and a less drastic build in crude oil inventories.

Total product supplied last week surged 1.66 million b/d to 15.76 million b/d, the highest since late March, the data showed.

In particular, nationwide gasoline stocks showed their first decline since mid-March, falling 3.7 million barrels to 259.57 million barrels.

Meanwhile, US crude build amounted to 8.99 million barrels, around 1 million barrels lower than analysts' forecasts in an S&P Global Platts survey on Monday.

The US inventory trends are fueling hopes that energy demand is turning higher, now that many US states have begun the process of reopening their economies, UOB analysts said in a note Thursday.

More countries are starting to ease lockdown measures, which were implemented at the height of the COVID-19 pandemic, even though the lifting of these measures are expected to take place in gradually.

"Demand has most likely troughed with several large economies now considering 'exit strategies' or 'new normal' and lifting draconian lockdown restrictions," AxiCorp's chief market strategist Stephen Innes said in a note Thursday.

"All the while, OPEC+ quotas are due to kick in on Friday, suggesting short term supply conditions have likely peaked," Innes added.

Recent news around developments of a new COVID-19 drug also lifted sentiment to some extent, according to media reports Wednesday.