The EIA highlighted a fall in US crude inventories by 745,000 barrels to 531.5 million barrels last week. Credit: georgiusevenson from Pixabay.

Oil prices have increased due to a sudden drop in the US crude stocks by 745,000 barrels.

Brent crude futures increased $0.6, or 0.2%, at $29.25 a barrel, while US West Texas Intermediate (WTI) crude futures were up $0.18 to $25.47 a barrel, Reuters reported.

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Both Brent and WTI futures witnessed gains over the past two weeks as countries started easing lockdown restrictions.

Data from industry group Energy Information Administration (EIA) highlighted a fall in US crude inventories to 531.5 million barrels in the week that ended on 08 May adding support to oil prices.

However, in the wake of new infected cases rising in China and South Korea, investors are concerned about a second wave of coronavirus cases which would result in poor economic recovery as well as fuel demand.

OANDA senior market analyst Edward Moya was quoted by the news agency as saying: “It is hard to get excited about a steady rebound for crude demand when the world’s largest economy has significant uncertainty about the outlook and big downside risks.”

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Due to slump in usage of fuel, the Organization of Petroleum Exporting Countries (OPEC) said it expects global oil demand to sink by 9.07 million bpd this year.

ING Economics said in a note: “(Second-quarter) demand for OPEC oil is just 16.77 million bpd, well below OPEC output levels, even when full compliance of OPEC+ cuts are taken into consideration.”

The OPEC+ Group has officially started record supply cut production of approximately ten million bpd cuts agreed by the OPEC+ Group from 01 May and will extend it until June.

Furthermore, Saudi Arabia said earlier this week that it plans to cut production by a further one million barrels per day (bpd) next month.