© Reuters. FILE PHOTO: The sun sets behind an oil pump cylinder on a drilling platform in the Permian Basin in Loving County
By Sonali Paul
MELBOURNE (Reuters) – Crude oil futures jumped nearly 5% early in the session Thursday after US President Donald Trump said he expected Saudi Arabia and Russia reach an agreement in the coming days to end their oil price war.
Brent crude oil futures contracts () rose 4%, or $ 1, to $ 25.74 at 0118 GMT, after peaking at $ 25.89.
West Texas Intermediate (WTI) crude () futures contracts rose 3.7% or 75 cents to $ 21.06 after peaking at $ 21.47.
Trump said in a press conference that the oil industry had been “devastated,” as oil prices plummeted to 18-year lows in the midst of a market share battle between Saudi Arabia and Russia and the demand for fuel being criticized by the coronavirus pandemic. He said he expected the pair to “settle over the next few days” after speaking to leaders of the two countries.
“It’s very bad for Russia, it’s very bad for Saudi Arabia. I mean, it’s very bad for both. I think they will make a deal, “he told reporters at the White House.
He also said he would meet with oil sector leaders, where he would discuss a range of options to help the industry in the midst of high demand, as the coronavirus epidemic has dampened industrial activity and prevented cars from rolling.
Crude stocks in the United States increased 13.8 million barrels, their largest weekly increase since 2016.
Analysts expect the same will happen in the coming weeks as refiners absorb less crude oil, with lower consumption of gasoline and jet fuel. Gasoline demand suffered its biggest weekly decline ever, as economic activity fell due to the coronavirus pandemic, according to data from the U.S. Energy Information Administration.
Research firm Rystad Energy estimates that global demand for crude oil in April will drop nearly 23% year-on-year to 77.6 million bpd.
Thursday’s increase may also be due to traders expecting high-cost US shale producers to be pressured to cut production, said CMC Markets chief market strategist Michael McCarthy.
“High debt levels could see some of these producers wiped out,” he said.
American shale producer Whiting Petroleum Corp (N :), formerly the largest oil producer in North Dakota, became the first publicly-traded victim of the collapse in oil prices on Wednesday as it filed for bankruptcy (Chapter 11).
The company said it had worked to cut costs and would continue to operate as part of its proposed restructuring.
Fusion Media or anyone involved with Fusion Media will not accept responsibility for loss or damage resulting from reliance on information, including data, quotes, charts and buy / sell signals contained on this website. Please be fully aware of the risks and costs associated with trading in the financial markets, this is one of the riskiest forms of investing possible.