(Bloomberg) -- Oil advanced for a second day on signs that global production cuts are beginning to offset the demand destruction caused by the coronavirus.Futures in New York rose around 5% toward $16 a barrel after surging by more than a fifth of their value on Wednesday. Output from the U.S. will fall by 2 million barrels a day in May compared with March and the price of crude has likely bottomed out, the head of trading house Mercuria Energy Group Ltd. said.There were also some positive signs in Energy Information Administration data released Wednesday, which showed a surprise drop in American gasoline stockpiles and a jump in demand. In China, traffic is returning to the streets, supporting a boost in fuel consumption and refinery processing rates.Despite the indications of a tentative rebound in demand, there’s still a massive global glut of oil that will need to be cleared before there can be any meaningful recovery in prices. A fleet of supertankers carrying 43 million barrels of Saudi Arabian crude is bearing down on the U.S., which will add to the over-supply in the world’s largest economy.WTI for June delivery rose 4.7% to $15.76 a barrel on the New York Mercantile Exchange as of 8:09 a.m. in Singapore after jumping 22% on Wednesday. The discount for June futures relative to July narrowed to $3.87 after blowing out to almost $8 Tuesday as major index funds ditched the front-month contract.Brent added 2.3% to $23.06 a barrel on the ICE Europe Futures exchange after climbing 10% in the previous session.In another sign of the supply response, Russian Energy Minister Alexander Novak told the Interfax news agency that the nation’s oil companies will cut production by about 19% from February levels. Nigeria, which has been struggling to sell its oil even at $10 a barrel, will ship the smallest volume of its key Qua Iboe crude grade since 2016 in May and June.The EIA reported a smaller-than-expected 8.99 million-barrel increase in U.S. crude stockpiles and a 3.64 million-barrel build at Cushing, Oklahoma, the delivery point for futures. U.S. gasoline inventories fell by 3.67 million barrels, compared with expectations for a build of 2.49 million. Weekly gasoline supplied, an indicator of demand, rose by 549,000 barrels a day.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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