Oil surges on demand hopes as lockdowns start easing

london — Oil prices soared higher on Tuesday on hopes for a recovery in vehicle traffic and fuel demand as some European and Asian countries along with several US states began to ease coronavirus lockdown measures.

International benchmark Brent crude rose $2.77, or 10.2 per cent, to $29.97 a barrel by 1530GMT.

US West Texas Intermediate (WTI) crude futures traded $3.47, or 17 per cent, higher at $23.86 a barrel.

Brent has closed higher the previous five sessions, while WTI has closed higher for the last four.

Italy, Spain, Nigeria and India, as well as some US states including Ohio, began allowing some people to go back to work and opened up construction sites, parks and libraries.

US President Donald Trump praised the rise in oil prices and hailed measures by the states to reopen their economies.

Vehicle traffic in most of the United States, including those yet to lift shelter-in-place orders, has also rebounded, RBC Capital Markets research said in a note.

“We’ll see a pop in gasoline demand because people are stir-crazy and want to get outside the house, even if it’s just a drive to nowhere,” said John Kilduff, partner at hedge fund Again Capital in New York. “Also with workplaces reopening, there’s going to be cars on the road.”

Swiss bank UBS said the easing of restrictions would help lead to a balance in supply and demand for the oil market in the third quarter and even projected an undersupply by the fourth, forecasting an end-2020 recovery of Brent to $43 per barrel and $55 by mid-2021. —

We’ll see a pop in gasoline demand because people are stir-crazy and want to get outside the house, even if it’s just a drive to nowhere John Kilduff,

Partner at Again Capital