Wall Street's bearish views that oil could crater in the next couple of weeks is being challenged as crude futures bounce off 2015 highs and are now up 17 percent this month.
West Texas Intermediate futures for May surged more than 5 percent Wednesday after U.S. government inventory data showed the smallest rise in oil stockpiles this year, a drop in gasoline inventories and a slight fall in U.S. oil production. Even so, distillate product supplies rose, but the 1.3 million barrel increase in oil inventories was the smallest build since Jan. 2 and was well below the 4.1 million expected by analysts.
"I think what we're seeing here is there's a big segment of the market that is saying: 'Prices have bottomed and we are going to see output growth weaken and that's going to lead to a turnaround in prices.'" said Gene McGillian, an oil analyst at Tradition Energy. "That's why we're watching as we get above the February highs, we want to see if big volume floods the market."