Oil gained in a day of choppy trading as investors weighed supply cuts and a demand rebound against an ominous economic outlook from the Federal Reserve.

West Texas Intermediate crude for July delivery rose 1%. Output cuts by the world’s largest producers are whittling down a supply glut while oil consumption is recovering as economies around the globe emerge from lockdowns. Citigroup Inc (NYSE:C). said the oil surplus weighing on the market in the second quarter is expected to turn into a record deficit in the third.

“The demand side has come off the low, the supply side is still falling,” said Peter McNally, global lead for industrials, materials, and energy at Third Bridge. “That has led to this bounce back in the prices.”

But investors were disheartened by bearish remarks from Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin on Tuesday. The head of the central bank told a Senate committee that Americans could start losing their homes and warned that long-term unemployment can damage the economy.

Last updated on Wed., May 20, 2020.