Brent finished at $32.50 per barrel capping a third consecutive week of gains while WTI topped $29.43 per barrel which was close to a two-month high.
The Brent/ WTI spread has narrowed significantly to $3.07 per barrel, which makes US crude oil exports less competitive to other Brent-related Atlantic basin barrels.
Oil gained despite bearish uncertainties surrounding COVID-19 as economic uncertainty kept market sentiment cautious.
The physical crude market was still weighed down by the millions of barrels being stored on tankers worldwide.
There are more than 200 million barrels of crude oil and petroleum refined products in floating storage as reported by S&P Global Platts.
Still, the crude oil demand outlook is improving as governments ease lockdown measures.
Strong signs of compliance with OPEC+ supply cuts added to the improving market sentiment, especially with large produces within OPEC having already deepened June output cuts which could yet be extended further.
This was in addition to hefty output cuts from producers outside OPEC+ from the US, Canada, Brazil and Norway.
The US rig count continued to fall for the ninth consecutive week, dropping by 34 to 258 rigs, which implies a further imminent decline in the US crude oil production.
China refining capacity posted the first uptick since the coronavirus outbreak after increasing to 13.16 million bpd in April. It is expected to further increase during May and June as the country begins to emerge from a months-long lockdown. This has given oil traders some hope that demand will begin to recover over the coming weeks keeping in mind that China is the largest crude oil importer in the world.
The oil demand outlook has improved, particularly in Asia, driven primarily by rising gasoline consumption as citizens get back in their cars.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.