Brent crude prices are rising after falling to record lows yesterday

Brent crude prices recovered last night after falling to the lowest level of the year yesterday.

At the time of publishing, Brent futures were trading 0.5 per cent higher at $50.71 a barrel while West Texas Intermediate (WTI) oil prices were 0.36 per cent at $47.83 a barrel.

Yesterday, the global benchmark erased gains made since the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec producers including Russia agreed to cut output by 1.8m barrels per day (bpd) over six months. Rising US stockpiles and ramped up production of shale gas have undercut Opec's efforts to reduce the global supply glut.

According to data from industry group the American Petroleum Institute (API), US crude inventories fell by 4.2m barrels in the week ended 28 April to 528.3m barrels. Analysts had expected a decrease of 2.3m barrels. Gasoline and distillate inventories, which have lately been driving price reactions, also dropped.

The US government will release its Energy Information Administration (EIA) inventory data later today.

"There is precautionary buying following API data and leading to EIA data tonight," said Ric Spooner, chief market analyst at CMC Markets.

"The lower oil gets, there is potential for forming a base. We are near lows made in March both in Brent and West Texas and if we do see, as many expect, a good run of draw in inventories into the summer, I think there is some upside potential."

Analysts at Accendo Markets said despite the rally, oil prices remain in a technical downtrend.

Despite the declines, oil prices are still well above the lows seen at the beginning of last year. UK oil major BP yesterday revealed higher oil prices helped it smash analyst forecasts. Brent crude prices averaged around $54 per barrel in the first quarter of this year compared with just under $34 a barrel in the same period last year.

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