* Some countries prise open COVID-19 lockdowns
* Russia's Novak says storage weighing on oil prices
* BP expects oil demand to drop 15 million bpd in Q2
(Updates prices)
By Bozorgmehr Sharafedin
LONDON, April 28 (Reuters) - Oil prices were mixed on
Tuesday as optimism about the easing of coronavirus-related
restrictions reassured markets, although traders remained
cautious with storage capacities filling up fast and supply cuts
not deep enough to counter falling demand.
Brent crude rose 10 cents, or 0.5%, to $20.09 a
barrel at 1218 GMT, following a 6.8% slide on Monday.
U.S. West Texas Intermediate (WTI) crude was down
$1.50, or 12%, at $11.28 a barrel. The contract plunged 25% on
Monday.
"While wild price swings are set to last in the very near
term, we see more upside than downside from prices around $20
per barrel. The oil price should recover in the longer term,"
said Norbert Rücker, analyst at Swiss bank Julius Baer.
From Italy to New Zealand, governments announced the easing
of restrictions, although Britain said its too dangerous to
relax a lockdown for fear of a deadly second outbreak. More
parts of the United States looked set to restart business.
German retailers sought on Tuesday to persuade the
government to let all stores operate normally from May 4, saying
the decision to only allow smaller stores to open was confusing
for customers.
"While we expect oil demand to modestly recover from the
April lows as countries ease some lockdown measures, demand will
remain under severe pressure in the near term because of the
COVID-19 pandemic," said UBS commodities analyst Giovanni
Staunovo.
BP Chief Executive Bernard Looney told Reuters his
firm expected global oil demand to drop by about 15 million
barrels per day (bpd) in the second quarter due to
coronavirus-related movement restrictions.
That is more than the 10 million bpd of cuts agreed by the
Organization of the Petroleum Exporting Countries, Russia and
other allied producers. The reductions are due to be implemented
from May 1.
Russian Energy Minister Alexander Novak said on Tuesday oil
markets would start balancing out once an output deal took
effect, but no significant rise in prices was likely in the near
future due to high levels of global storage.
Analysts said part of the WTI decline was due to retail
investment vehicles like exchange-traded funds selling out of
the front-month June contract and buying into months later to
avert massive losses like last week, when WTI fell below zero.
The United States Oil Fund LP (USO), the largest
oil-focused U.S. exchange-traded product, said it would further
shift its holdings into later-dated contracts.
"The exodus in our view remains motivated by concerns over
the saturation of storage capacity at Cushing and the associated
risk of negative pricing," Harry Tchilinguirian, global oil
strategist at BNP Paribas, told the Reuters Global Oil Forum.
Global storage onshore was estimated to be about 85% full as
of last week, according to data from consultancy Kpler.
In a sign of the energy industry's desperation for places to
store petroleum, oil traders are resorting to hiring expensive
U.S. vessels to store gasoline or ship fuel overseas, shipping
sources said.
(Reporting by Bozorgmehr Sharafedin in London; Additional
reporting by Sonali Paul in Melbourne and Koustav Samanta in
Singapore; Editing by Alexander Smith and Louise Heavens)
BP (BP.)
