Crude oil futures jumped nearly 5% in early trading on Thursday after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal in the next few days to end their oil price war.
Brent crude futures rose 4%, or $1, to $25.74 as of 0118 GMT, after touching a high of $25.89.
U.S. West Texas Intermediate (WTI) crude futures were up 3.7% or 75 cents, at $21.06, after hitting a high of $21.47.
Trump said at a news conference the oil industry had been "ravaged", with oil prices having plummeted to 18-year lows amid a battle for market share between Saudi Arabia and Russia and fuel demand being slammed by the coronavirus pandemic. He said he expected the pair would "work it out over the next few days" after talking to both countries' leaders.
"It's very bad for Russia, it's very bad for Saudi Arabia. I mean, it's very bad for both. I think they're going to make a deal," he told reporters at the White House.
He also said he would be meeting with oil executives, where he is expected to discuss a range of options to help the industry amid the sharp hit to demand as the coronavirus outbreak has hammered industrial activity and kept cars off the road.
U.S. crude stockpiles rose 13.8 million barrels in their biggest weekly increase since 2016.
Analysts expect more of the same in coming weeks as refiners take in less crude, with gasoline and jet fuel use plummeting. Gasoline demand suffered its biggest weekly drop ever as economic activity has dropped due to the coronavirus pandemic, U.S. Energy Information Administration data showed.
Research firm Rystad Energy estimates global crude oil demand in April will fall nearly 23% year-on-year to 77.6 million bpd.
Thursday's rise could also be due to traders expecting high-cost U.S. shale producers to come under pressure to cut production, CMC Markets chief market strategist Michael McCarthy said.
"High debt levels could see some of those producers wiped out," he said.
U.S. shale producer Whiting Petroleum Corp , once the largest oil producer in North Dakota, on Wednesday became the first publicly traded casualty of the oil price collapse as it filed for Chapter 11 bankruptcy.
The company said it had worked to cut costs and would continue to operate under its proposed restructuring.