Reuters News Agency reported that oil prices extended gains for a third session on Wednesday, rising alongside broader financial markets as the United States is expected to approve a massive aid package to stem the economic impact of the coronavirus pandemic.
US crude CLc1 rose to a high of $25.24 a barrel early in the session and was at $24.86 a barrel, up 85 cents, or 3.5%, at 0732 GMT.
Brent crude LCOc1 was trading up 65 cents, or 2.4%, at $27.80 a barrel after earlier rising to a high of $28.29.
US senators and Trump administration officials have reached an agreement on the $2 trillion stimulus bill which is expected to be passed through the Congress later on Wednesday.
Still, demand for oil products, especially jet fuel, is falling worldwide as more governments announce nationwide lockdowns to curb the spread of the coronavirus, putting a lid on oil price gains.
ING revised down on Wednesday its Brent crude price forecast for the second quarter to $20 a barrel from $33, because of the demand shock caused by the coronavirus outbreak and the expected supply surge from Saudi Arabia and Russia in April.
“Demand continues to deteriorate as more countries impose shutdowns and stricter travel restrictions,” the bank’s analysts said in a note.
Oil prices have fallen 45% so far this month after the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, a grouping known as OPEC+, failed to extend an agreement to cut production and support prices beyond end-March.
“A pare back in production from the OPEC+ and a stabilization in the coronavirus episode are both needed to lift oil prices back to its pre-collapse prices,” analysts at OCBC Bank said in a note.
In the United States, crude inventories fell by 1.2 million barrels in the week to March 20 to 451.4 million barrels, compared with analysts’ expectations for a build of 2.8 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.
Gasoline and distillate stocks also fell last week, API said.
Analysts said in a Reuters poll on Tuesday that US crude oil stockpiles likely built for a ninth successive week, while inventories of refined products were expected to have dropped, with gasoline set to decline for the eighth straight week.
The weekly report from the Energy Information Administration (EIA) is due at 10:30 a.m. on Wednesday.