Oil prices climbed in early trade on Tuesday, adding to gains in the previous session, on expectations that fuel demand will begin to pick up as some U.S. states and nations in Europe and Asia start to ease coronavirus lockdown measures. West Texas Intermediate (WTI) crude CLc1 futures rose as much as 8.2% to a three-week high of $22.06 and were up 7.6%, or $1.55, at $21.94 at 0108 GMT. The U.S. benchmark is on a five-day win streak that started on April 29.
Brent crude LCOc1 futures hit a high of $28.37 a barrel in early trade and were up 4.1%, or $1.12 cents, at $28.32. Brent is up for a sixth straight day. Both benchmark contracts rose about 3% on Monday. Prospects improved for fuel demand as some U.S. states and several countries, including Italy, Spain, Portugal, India and Thailand, began allowing some people to go back to work and opened up construction sites, parks and libraries.
"Considering ... the depths of demand destruction, markets are probably inclined to take any good news relatively quickly," said Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group.
Global oil demand probably collapsed by as much as 30% in April, analysts have said, and the recovery is likely to be slow, especially with airlines expected to remain largely grounded for months to come. Australian national carrier Qantas Airways' Chief Executive Alan Joyce said on Tuesday that "international travel demand could take years to return to what it was."
With Saudi Arabia, Russia other major producers and companies slashing output, the market shrugged off a decision by the Texas energy regulator to cancel a vote on mandating a 20% output cut in the United States' biggest oil-producing state. The Texas Railroad Commission had been due to hold the vote on Tuesday, but Commissioner Ryan Sitton was unable to win support from his fellow commissioners for the plan. The proposal was strongly opposed by oil trade groups and major shale producers.
"The intent in itself was positive - but it was always going to be a long shot," Hynes said.