Oil prices rose on Wednesday amid signs of improving demand and a drawdown in the U.S. crude inventories but worries over the economic fallout from the coronavirus pandemic capped gains.
Brent crude futures for July delivery were up 23 cents, or 0.7 per cent, at $34.88 per barrel at 0347 GMT.
The U.S. West Texas Intermediate (WTI) crude futures for July CLc1 were up 14 cents, or 0.4 per cent, at $32.10 a barrel.
The July contract closed on Tuesday at $31.96, up by one per cent.
The June contract expired on Tuesday at $32.50 a barrel, up 2.1 per cent, as the WTI futures market avoided the chaos of last month’s May expiry when prices sank below zero.
Oil prices have mainly risen during the past three weeks, with both benchmarks climbing above $30 for the first time in more than a month on Monday.
This was supported by massive output cuts by major oil-producing countries and signs of improving demand.
The U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from industry group, the American Petroleum Institute (API) showed on Tuesday.
Refinery runs rose by 229,000 barrels per day, the API said, a sign that plants are trying to produce more fuel as the U.S. eases its lockdowns put in place to halt the spread of the novel coronavirus.
Official data from the Energy Information Administration (EIA) is due at 10.30 a.m. (1430 GMT) on Wednesday.
“Oil markets have worried about high crude inventories but yesterday the WTI June contract expired and rolled over to July smoothly as concerns over crude stocks ease and demand have improved in the short-term,’’ said Kim Kwang-rae, commodity analyst at Samsung Securities in Seoul.
Asia’s gasoline profit margins turned positive on Tuesday for the first in nearly two months, giving hope to global oil refiners.
But lingering concerns about the economic fallout from the coronavirus pandemic, especially in the U.S., which is the world’s biggest oil consumer, kept a lid on prices.
The U.S. Federal Reserve Chair, Jerome Powell, said on Tuesday layoffs by state and local governments will slow the U.S. economic recovery.
But Boston Federal Reserve Bank President, Eric Rosengren, said the U.S. unemployment rate is likely to stay at double-digit levels through the end of the year.