Oil jumped 5% on Tuesday to above $28 a barrel, supported by steps by the US Federal Reserve to bolster the economy and hopes the United States will soon reach a deal on a $2 trillion coronavirus aid package.
The Fed on Monday rolled out an array of programmes including backing for the first time corporate bond purchases.
US Treasury Secretary Steven Mnuchin voiced confidence that a deal on the aid package would be reached soon.
Brent crude was up by $1.44 a barrel, or 5.3%, to $28.47 by 0926 GMT. The global benchmark fell to $24.52 on Wednesday, its lowest level since 2003.
US West Texas Intermediate gained $1.26, or 5.4%, to $24.62.
“Oil is clawing its way higher, mainly on the back of the weaker dollar that stemmed from the Fed’s unprecedented measures,” said Edward Moya, senior market analyst at broker OANDA.
The expected stimulus pushed the US dollar lower against other currencies. A weaker dollar tends to support the price of oil and other dollar-denominated commodities.
Still, the price of oil has halved in 2020, hit by the demand shock caused by the coronavirus outbreak and government restrictions to contain it, and the sudden removal of measures by OPEC and other nations to limit supply.
British Prime Minister Boris Johnson ordered Britons on Monday to stay at home to halt the spread of coronavirus, imposing curbs on everyday life without precedent in peacetime.
A deal by the Organization of the Petroleum Exporting Countries and other producers including Russia fell apart in early March, when Moscow refused to support further output curbs and OPEC responded by removing limits on its own production.
Saudi Arabia now plans to boost exports, although flows have yet to increase in March, sources at companies that track oil flows said on Monday.
Underlining ample supplies, the latest round of weekly US oil reports are expected to show crude inventories rose for a ninth straight week.
Industry group the American Petroleum Institute is scheduled to release its supply report at 2030 GMT, followed by the government’s figures on Wednesday.
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