Oil has been rallying on the back of an uptick in demand paired with record supply cuts, but data on Wednesday from the U.S. Energy Information Administration showed a surprise build in inventory, suggesting that the demand recovery may have stalled. For the week ending June 5, inventory rose by 5.7 million barrels to a record high of 538.1 million barrels.

Another key driver of WTI’s recent recovery, which has seen prices jump more than 50% in the last month, has been producers curbing output. Over the weekend, OPEC and its oil-producing allies agreed to extend its record production curb — equivalent to about 10% of pre-coronavirus global demand — through the end of July. In the U.S., production has pulled back from a record of over 13 million barrels per day in March as historically low prices prompted companies to reduce output. But with oil moving higher in recent weeks, some producers have begun to open the taps once again, which could send prices lower.

“The higher price levels that we experienced lately have motivated producers to restart some of their shut-down production, in effect reversing a bit the positive price effect that lower production had created,” said Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy. “How prices develop further will depend a lot [on] how much and how quickly this shut production will come back to business,” she added.

The broader market was also sharply lower on Thursday, with the Dow Jones Industrial Average dropping more than 800 points and the S&P 500 dipping 2.5%. Stocks most sensitive to the economy’s reopening dragged markets lower as Covid-19 cases in the U.S. surpassed two million. Hospitalizations rose to a record level for a third straight day on Wednesday in Texas, one of the states in the phase one reopening plan, prompting fears that a second wave of cases could be coming. “The global economy is still in a precarious position,” noted Cailin Birch, global economist at The Economist Intelligence Unit. “The dip in oil prices in recent days most likely reflects the end of the price boost that came from the initial economic re-opening. The global economy is now settling in for a long, slow recovery process, which we only expect to pick up in late 2021, assuming a Covid-19 vaccine becomes available then,” she added.