Oil prices jumped again on Tuesday on hopes for a recovery in vehicle traffic and fuel demand as some European and Asian countries along with several U.S. states began to ease coronavirus lockdown measures.
West Texas Intermediate (WTI) crude futures were 7.75%, or $1.58, higher at $21.97 per barrel by 0820 GMT. The U.S. benchmark has closed higher for the last four sessions.
Brent crude futures were up 5.5%, or $1.49, at $28.69.
Italy, Spain, Nigeria, and India, together with Ohio and other U.S. states, began allowing some people to go back to work and opened up construction sites, parks and libraries.
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.
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/bbl by mid-2021.
"The outlook for this and next year is turning brighter: demand should be supported by a recovering global economy," UBS commodities analyst Giovanni Staunovo said.
Reflecting hopes that the oil industry may have passed the worst of coronavirus-induced lockdowns, hedge funds, and money managers were buyers of petroleum derivatives for a fifth straight week in the week ended April 28.
Still, global oil demand and prices suffered historic losses in April, and recovery is likely to be slow with air traffic not expected to rebound any time soon.
Australian national carrier Qantas Airways' Chief Executive Alan Joyce said on Tuesday that "international travel demand could take years to return to what it was."
"Travel demand is essentially zero for the foreseeable future," United Airlines Holdings Inc spokesman Frank Benenati said. The Chicago-based carrier plans to cut at least 3,400 management and administrative positions in October.
With Saudi Arabia, Russia other major producers and companies slashing output, the market shrugged off a decision by a Texas energy regulator to abandon a proposal for a 20% output cut in the United States' biggest oil-producing state.
U.S. crude oil stockpiles were seen rising for a 15th consecutive week, while inventories of oil products also likely built last week, a preliminary Reuters poll showed.
Citi analysts expect that as demand returns significant production curtailments will turn the record inventory builds of the second quarter into record draws in the third quarter.
(Reporting by Shu Zhang in Singapore and Sonali Paul in Melbourne; Editing by Kirsten Donovan)