Oil was anchored near $24 a barrel as investors weigh the prospect of a demand recovery against a huge glut that’s testing global storage capacity limits. Futures were stable in New York after losing 2.3% on Wednesday, with mixed signals emerging about any possible demand recovery. European airline Air France-KLM said the impact of the coronavirus outbreak could be felt for years, while its counterpart IAG SA said air travel won’t return to pre-pandemic levels before 2023. American gasoline consumption on a four-week basis rebounded at its strongest rate on record last week but remained far below the seasonal average.
The OPEC+ coalition that includes Saudi Arabia and Russia started implementing daily output cuts of almost 10 million barrels a day on May 1, while in the U.S. — the world’s biggest producer — prominent shale explorers and companies such as Chevron Corp. have flagged supply curbs. While the first signs of a pickup in demand are emerging, traders are now wrestling with just how quickly it can come back, and whether any increase will be enough to burn off a huge glut of oil held in storage.
“Oil losing or gaining less than a dollar’s worth is the new stable,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. “We see a slow market recovery coming from June as demand will indeed see a boost and most of the now unused produced oil will find more eager buyers.”