Oil’s recovery from last month’s epic plunge accelerated as production cuts start to whittle down a supply glut and more economies ease their coronavirus lockdowns.

Futures rose for a fifth day, surging 20% in New York Tuesday to close above US$24 -- its highest price in almost a month -- while Brent topped $30 a barrel during the session for the first time since April 15.

As OPEC+ producers begin to cut output as part of an historic agreement, U.S. explorers are shutting in production in the country’s biggest shale fields. Diamondback Energy Inc., Parsley Energy Inc. and Centennial Resource Development Inc. on Monday became the latest Permian Basin producer to say they were dialing back.

“The primary issue is that there is less fear of a storage crisis, and there is also an anticipation that production is going to start to fall pretty quickly,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC.

The American crude benchmark has more than doubled from an intraday low near US$10 a barrel last week. The discount on crude for June delivery relative to July, a structure known as contango, tightened to its narrowest in more than a month, indicating that concerns about oversupply may be easing.

Prices were little changed after an American Petroleum Institute report showed that U.S. crude stockpiles rose 8.44 million barrels last week, compared with 9.98 million barrels the week prior, according to people familiar. Supplies in Cushing, Oklahoma, rose by 2.68 million barrels, according to the report.

Morgan Stanley says the supply glut has probably hit its apex, though the market will likely remain oversupplied for several weeks. Inventories in China appeared to have peaked, according to satellite data, and the U.S., Russia and Brazil are showing signs of a rebound in driving.

There are also early signs that the plunge in fuel consumption caused by the spread of the coronavirus might have bottomed out in some markets, prompting U.S. President Donald Trump to tweet on Tuesday: “Oil prices moving up nicely as demand begins again!”

“Certainly some of the restarts globally are helping,” said Andrew Lebow, senior partner at Commodity Research Group. “We’ll be well below where demand should be this time of year, but nevertheless, for the time being, the worst on the demand side has probably passed.”

Prices

• WTI for June delivery rose US$4.17 to settle at US$24.56 a barrel on the New York Mercantile Exchange.
• Brent for July settlement advanced US$3.77 to US$30.97 a barrel.

However, a substantial glut of crude remains, with supplies from the Middle East soaring to their highest level since at least January 2017 last month.

Saudi Arabia, Iraq, Kuwait and the United Arab Emirates, which account for about 70 per cent of OPEC’s production, shipped a combined average of 18.9 million barrels a day of crude and condensate in April, tanker-tracking data compiled by Bloomberg show. That’s 2 million barrels a day more than revised March levels.

More oil-market news

• Pierre Andurand, the hedge fund manager known for bullish oil calls, recorded further gains last month in a market buffeted by the coronavirus crisis.
• Saudi Aramco delayed the release of its key monthly pricing for June crude exports by one day until Wednesday, according to people with knowledge of the matter.
• A prominent shale producer said all it needs is oil around $30 a barrel to consider bringing back curtailed crude output and fracking new wells.
• Bharat Petroleum Corp. expects India’s fuel consumption to improve this month from staggering low levels in April following the relaxation of lockdown restrictions and seasonal demand from the agricultural sector

--With assistance from James Thornhill and Elizabeth Low.