(Bloomberg) -- Oil held losses even as a key U.S. inventory report indicated the storage crisis is easing and demand is slowly recovering.
West Texas Intermediate futures fell about 5% Wednesday. Weekly gasoline supplied, an indicator of demand, rose by 804,000 barrels a day, marking the fourth week of gains and the biggest weekly bump since June 2018, according to the U.S. Energy Information Administration. U.S. crude stockpiles increased by 4.59 million barrels, the smallest build in six weeks, while gasoline stocks shrank by 3.16 million barrels.
Still, oversupply concerns persist as coronavirus-related lockdowns continue to crush demand. Economic data also weighed on prices, with the U.S. losing a record number of jobs in April and the European Union predicting steep contractions across the region.
Crude’s collapse has forced countries across the world to rein in oil production. Russian output was down 16% in the first five days of May, Interfax reported, while in the U.S., Plains All American Pipeline LP said it sees close to 1 million barrels a day of Permian shut-ins in May.
Though supply is falling, the extent of the damage to the global economy is becoming clearer. The European Commission said Italy, Spain and Greece are all facing contractions of more than 9% this year, while ADP Research Institute figures showed the U.S. lost more than 20 million jobs last month.
Most analysts don’t see demand rebounding to pre-virus levels for at least a year, with some questioning if that will ever happen. The risk of a second wave of infections in the U.S. as states reopen can’t be discounted, while deteriorating relations between Washington and Beijing may hamper the global economic recovery.
“We’ve gone on Brent from $20 to $32, that’s a lot,” said Tor Svelland, chief executive officer of commodities fund Svelland Capital. “The demand destruction is still there. It’s a very, very strong move.”
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