The price of a barrel of brent crude climbed on Wednesday after earlier hitting its lowest level since June 1999 as the coronavirus pandemic continues to roil oil prices.
At $21.01 per barrel, brent crude (BZ=F) was trading almost 9% higher. Brent crude prices, which fell 24% on Tuesday, had fallen by more than 50% over the last week.
Meanwhile, crude oil (CL=F), which hit historic lows on Monday, also rose on Wednesday 22 April. June West Texas Intermediate futures climbed 29% to around $14.97 per barrel.
Prices rose even as analysts warned that global oil storage capacity will quickly reach saturation point as the pandemic pushes demand for the commodity lower.
With most of the world on lockdown and travel heavily restricted, demand for fuel has tumbled by as much as 30% in recent weeks.
More than 140 million barrels of oil are now being stored at sea, as refineries, storage facilities, and pipelines across the world reach capacity.
Crude inventories in the US rose by 13.2 million barrels to 500 million barrels last week, according to the American Petroleum Institute.
The production cut of 9.7 million barrels a day announced by the world’s major oil-exporting nations will not come into effect until May, and may not be enough to offset the collapse in demand.
“The markets are still worried that we will not have freedom of movement, and we will not see demand recover until some time in the summer, and there’s a lot of debate,” Regina Mayor, global head of energy for KPMG, told Yahoo Finance on Tuesday.
“Personally I'm very bearish on crude price beyond 2020 and even into 2021,” she said.
Oil producers have been forced to slash capital spending and suspend new projects, but it is difficult for some companies to temporarily halt oil production.
In a note to investors on Tuesday, Goldman Sachs predicted a “violent rebalancing” for oil in the coming weeks and said that price volatility would remain “exceptionally high” in the short term.
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