Brent crude oil rebounded from two days of losses and US futures surged bolstered by tentative talk of additional supply cuts from OPEC producers and US inventory builds that were less dire than some expected.
Oil trading has been more volatile than ever in recent days.
The market is overwhelmed by a growing supply glut as demand craters amid governments orders for people to stay at home in order to stop the spread of the coronavirus.
US futures fell deep into negative territory on Monday, closing at a record minus-$US37.63 a barrel.
Early on Wednesday, Brent touched its lowest level since June 1999.
On Wednesday Brent rose $US1.04, or 5.4 per cent, to settle at $US20.37 a barrel.
Earlier in the session, the global benchmark fell to $US15.98, its lowest level since June 1999.
U.S. West Texas Intermediate crude futures for June delivery gained $US2.21, or 19.1 per cent, to settle at $US13.78 a barrel.
“By no means does this suggest that a price bottom has been placed since the supply/demand forces that drove negative crude pricing this week remain very much intact,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Since the start of the year, Brent has fallen about 65 per cent while WTI has dropped around 75 per cent.
The world’s major oil producers, led by the Organisation of the Petroleum Exporting Countries and its allies, attempted to wrest control of spiralling inventories by announcing a collective cut of 9.7 million barrels per day in supply in early April.
But those cuts will come too slowly to offset rising inventories, which hit 518.6 million barrels in the United States last week, just 3.0 per cent off an all-time record, the Energy Department said.
“If storage continues to increase at the end of the day, which seems likely considering all these Saudi barrels knocking at the door, then we are going to get to maximum storage sometime in the not-so-distant future,” said Bob Yawger, director of futures at Mizuho in New York.
Saudi Arabia on Tuesday said it was ready to take extra measures with other producers, and Iraq made similar comments. The next formal meeting of OPEC and allies, the group known as OPEC+, is scheduled for June.
Even without another formal agreement, decreasing storage capacity and falling demand could force producers to cut more.
An OPEC source told Reuters it was “logical” to expect the market to force more cuts on OPEC+ producers.
US crude inventories rose by 15 million barrels last week, in line with analysts’ expectations, though some had predicted a build of more than 20 million barrels.
US gasoline stocks rose by just 1.0 million barrels, less than expected, while product supplied, a proxy for demand, increased modestly for the first time in weeks.
This week the front-month US contract fell below zero for the first time ever ahead of its Tuesday expiry as panicking traders paid customers to take oil off their hands so they would not have to take delivery with nowhere to store the surplus.
Inventories at the Cushing, Oklahoma, delivery hub for WTI are nearly full, at almost 60 million barrels, with much of the rest leased already.