The West Texas Intermediate crude price rose by 4% this morning, currently trading at US$33.12 per barrel, while the Brent rose 2.5% to US$35.67/bbl.
It is the first time the two benchmarks have jumped to above US$30/bbl in two months, with Australian Securities Exchange-listed Oil Search and Santos riding the wave this morning, rising 9.1% and 5.9% respectively and the energy sector up over 4.4% or 332 points to 7,505.5 points.
The ASX and markets around the world rose overnight and this morning after news came that company Moderna may be making progress on vaccine for COVID-19.
It is generally agreed that movement of people within cities, across state borders and internationally will be restricted in some fashion until a vaccine is developed then rolled out, keeping oil demand low.
However the price jump comes after production has been throttled back across the globe and some easing of lock in restrictions has seen the number of people in lockdown move from a staggering four billion to 2.8 billion.
OPEC and its allies have cut just under 10 million barrels of oil per day in April, coming into effect at the beginning of May.
Saudi Arabia announced a further cut of 1MMbopd for June.
US operators meanwhile have already announced crude production shut-ins of at least 1.2MMbpd for May-June, and frac activity in the US has dropped about 62% on a standard-month basis in April, and won't recover before 3Q20, according to consultancy firm Rystad Energy.
In a note released yesterday, Rystad said low gas prices may be a blessing in disguise, as they are currently keeping them competitive, especially in the power sector, where gas use remains relatively stable in most countries.
However, Rystad's head of gas and power markets Carlos Torres-Diaz said overall gas consumption will fall by almost 2% this year because of the lower activity.
"2020 will be the first year since 2009 where there will be no growth in consumption," he said.
"This will be a hard blow for an industry accustomed to yearly growth rates of more than 3%."
But the International Energy Agency's new outlook last week said the drop in demand in oil may be far less steep than previously predicted, as some countries begin to lift their lockdowns in a "calculated risk" as the Italian government put it yesterday.
"Better than expected mobility in OECD countries and the gradual easing of lockdown measures led to an upward adjustment of 3.2MMbpd to our global second quarter 2020 demand number," the IEA's May Outlook said, adding it is still sharply down on last year by 19.9MMbpd.
"Optimism on the demand side of the oil equation has also helped prices climb further, with gasoline demand coming back as governments ease confinement measures," Rystad senior oil markets analyst Paola Rodriguez Masiu said.
China's oil demand is almost back to pre-virus levels thanks to the loosening of travel restrictions, after demand fell by 20% in February, according to Bloomberg, as the country went into lockdown.
However the green fields could be a small forest clearing given the twin worries of how the market will react once governments remove the support keeping companies afloat and the threat of a second wave of infections driving people back inside.
The IEA has also questioned how long OPEC+ members will stick to their agreed production cuts.
"These are big questions - and the answers we get in the coming weeks will have major consequences for the oil market," it said.