(Bloomberg) -- Oil’s rally ran out of steam -- after prices doubled over five days -- as optimism that output cuts are easing the supply glut was balanced by trepidation over what promises to be a long and uncertain recovery.Futures in New York fell toward $24 a barrel in Asian trading after surging 20% on Tuesday to close at the highest level in almost a month. Diamondback Energy Inc. and Parsley Energy Inc. became the latest U.S. drillers to cut production in the country’s biggest shale fields, although they said they would consider restoring output if prices rose above $30 a barrel.OPEC+ began implementing 9.7 million barrels per day of production curbs on May 1, helping to ease fears the world will run out of storage space for crude and fuels. The supply glut has probably hit its apex, according to Morgan Stanley, though the market will likely remain oversupplied for several weeks.While it’s possible the worst is over for oil markets, most analysts don’t see a rebound to pre-virus levels of consumption for at least a year, with some questioning if it will ever happen. The risk of a second virus wave in the U.S. as states reopen can’t be discounted, while deteriorating relations between Washington and Beijing will also hamper the global recovery.West Texas Intermediate for June delivery fell 1.6% to $24.16 a barrel on the New York Mercantile Exchange as of 9:26 a.m. in Singapore. WTI for June is now around $2 cheaper than for July, compared with more than $5 early last week suggesting concerns about over-supply have eased.Brent for July settlement declined 0.9% to $30.68 a barrel on the ICE Futures Europe exchange. It jumped 14% on Tuesday to close above $30 a barrel for the first time in three weeks.Hedge fund Westbeck Capital Management, which posted its best ever month in April after being short oil prices in the front of the curve, said the bull case for crude is now “simply exceptional.” April demand losses were overestimated and shut-ins are happening faster than anticipated, the fund said.U.S. crude stockpiles rose by 8.44 million barrels last week, the American Petroleum Institute reported, according to people familiar with the data. That would be the smallest increase since the week through March 20 if confirmed by Energy Information Administration figures due Wednesday. Supplies at the storage hub at Cushing, Oklahoma, rose by 2.68 million barrels, the API said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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