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SINGAPORE: Oil extended gains in Asia on Tuesday due to signs of an improvement in demand as the major coronavirus-affected economies begin to ease stringent restrictions and major producers cut production.
The US benchmark West Texas Intermediate for June delivery rose 7.26% to $ 21.87 a barrel in the morning trade.
The contract ended three percent higher in New York overnight, recovering from the day’s losses.
Benchmark international crude Brent for July delivery was changing hands at $ 28.25 a barrel, an increase of 3.86 percent.
“Oil fundamentals are finally showing signs of improvement, and prices are reacting positively,” said AxiCorp global markets strategist Stephen Innes.
“Supplies have started to decline rapidly, with signs of demand improving even when the major economies are in the early stages of reopening.”
Oil markets have been in crisis for weeks as the virus strangles demand due to business closings and travel restrictions, with US crude at one point falling into negative territory for the first time.
Prices starred in a massive rebound last week, with a 25% rise in WTI two days in a row as major producers began cutting production in line with a major deal, and as a sign of improved demand.
Economies from Asia to Europe have begun easing restrictions as the virus crisis peaks, helping to boost demand for crude.
Meanwhile, last week an agreement came into effect between the main producers to reduce production by almost 10 million barrels per day.
ANZ Bank said the market was raised by “hopes that the worst is behind the devastating level of demand destruction due to COVID-19.”
Energy data provider Genscape said reserves at the United States’ main oil reservoir in Cushing, Oklahoma, had increased by just 1.8 million barrels last week after weeks of large increases.
However, ANZ warned that “the market is still struggling to find a balance amid weak demand.”
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