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US oil prices head higher as storage concerns recede

Hudson Lockett in Hong Kong

US Oil prices were on track for their fifth straight day of gains as traders shook off concerns over global storage capacity which have hammered energy prices in recent weeks, while Asian stocks built on an overnight gain from Wall Street.

The gains for crude came despite a decision by the Texas Railroad Commission, the state’s oil and gas regulator, to drop an effort to force producers to cut output after running into opposition from energy companies.

West Texas Intermediate, the US marker, was up 6.7 per cent at $21.76 a barrel, on track for its fifth straight day of gains. Meanwhile Brent crude, the international benchmark, was up 4.1 per cent at $28.31.

A collapse in demand sparked by the coronavirus outbreak has put pressure on prices in recent weeks, with US prices swinging into negative territory as producers paid buyers to take product they could not find storage for.

Robert Rennie, global head of market strategy at Westpac, said US oil prices had been boosted by an early estimate showing reserves at the key oil storage centre of Cushing, Oklahoma had risen by only 1.8m barrels last week. If confirmed by data from the American Petroleum Institute later today, that would mark the smallest increase since mid-March.

In equities, Hong Kong’s benchmark Hang Seng index rose 0.9 per cent in morning trading, while Australia’s S&P/ASX 200 climbed 1.5 per cent. Japanese, Chinese and South Korean markets were closed for public holidays.

The gains for Asian equities came after Wall Street eked out a slight gain overnight, despite concerns over a resurgence in US-China tensions. The S&P 500 closed 0.4 per cent higher and the tech-heavy Nasdaq Composite notched a gain of 1.2 per cent.

Sentiment also received a boost from New York governor Andrew Cuomo, who suggested that part of the state could end its most stringent lockdown measures by mid-May as the state reported its lowest daily coronavirus death toll in more than a month. That helped bring daily fatalities in the US below 1,000 for the first time in as long.

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