Crude oil may struggle to top $40/barrel mark despite a glimmer of optimism

The oil market bulls may have as much cabin fever as road users. The first sign of positive news and oil prices jumped over $10/barrel in a week in lockstep with drivers getting into their cars as some travel restrictions ease. But the road to recovery is likely to be long and bumpy.

Gasoline consumption is a proxy for oil demand in many key countries – from the US to India – and there are tentative signals offering encouragement as some lockdown measures loosen. In the US, gasoline demand has climbed more than a third since its low at the start of April. Meanwhile, in India, fuel demand started recovering in the second half of April, with oil minister Dharmendra Pradhan confirming the pickup.