Oil prices swung in subdued trade on Wednesday after a massive rally this week, with traders weighing progress in the coronavirus fight as more countries ease lockdowns against brewing China-US tensions.
International benchmark Brent crude fluctuated between small gains and losses in Asian trading, and was down 0.61% at $30.78 a barrel in the afternoon.
The contract had surged 14% above $30 on Tuesday for the first time since mid-April.
US marker West Texas Intermediate also seesawed and was off 0.86% in the afternoon at $24.35, after rising 20% the previous day.
Oil markets were battered in April as the virus strangled demand owing to business closures and travel restrictions, with US crude falling into negative territory for the first time.
But they have started to rally – WTI has doubled since last Tuesday – as governments from the Pacific to Europe and some US states report lower new infection rates and deaths, and begin easing tough lockdowns.
Virus comments heighten tension
However, Donald Trump’s comments at the weekend hitting out at Beijing over its handling of the outbreak, saying it began in a Wuhan lab but so far offering no evidence, have raised tensions between the economic superpowers.
“Traders are incredibly cautious this morning, weighing all the possible China responses,” Stephen Innes, chief global market strategist at AxiCorp, said.
“And the one that would hurt the most would be for China to reduce imports of US oil.”
This week’s rally has also been supported by a deal agreed between top producers to reduce output by almost 10 million barrels a day, which came into effect on May 1.
And there are signs that the massive oversupply in the market is starting to ease as demand slowly comes back.
Energy data provider Genscape said earlier this week that stockpiles at the main US oil depot in Cushing, Oklahoma had increased by only 1.8 million barrels last week following weeks of major rises.