On Monday, investors saw a proverbial oil barrel that was decidedly half empty. A day later, it started looking a little fuller.
Oil prices jumped by almost 8 percent before falling back on Tuesday – a day after the biggest rout in nearly 30 years after Russia signalled that talks with OPEC could still be on the cards and investors took heart after governments said stimulus measures are in the offing to combat the fallout of the coronavirus outbreak.
United States President Donald Trump on Monday said he will be taking “major” steps to gird the US economy against the impact of the spreading outbreak, while the Japanese government plans to spend more than $4bn in a second package of steps to cope with the virus.
Brent crude futures were up 4.71 percent, to $35.98 a barrel around noon in New York, after hitting a session high of $38.22 a barrel.
West Texas Intermediate (WTI) crude gained 6.78 percent to $33.24 a barrel, after hitting a high of $34.60.
Both benchmarks had plunged 25 percent on Monday, dropping to their lowest levels since February 2016 and recording their biggest one-day percentage declines since January 17, 1991, when oil prices fell at the outset of the first Gulf War.
Trading volumes in the front-month for both contracts hit record highs in the previous session after three years of cooperation between Saudi Arabia and Russia and other major oil producers to limit supply fell apart on Friday, triggering a price war for market share.
Saudi Arabia, the world’s biggest oil exporter, escalated tensions with plans to supply 12.3 million barrels per day (bpd) in April, well above the current production levels of 9.7 million bpd, Saudi Aramco CEO Amin Nasser said on Tuesday.
April’s crude supply will be “300,000 barrels per day over the company’s maximum sustained capacity of 12 million bpd”, Nasser said in a statement received by Reuters news agency.
Price pared gains by more than $1 on the news.
Russian Energy Minister Alexander Novak said he did not rule out joint measures with OPEC to stabilise the market, adding that the next meeting between the cartel and its allies, a pairing known as OPEC+, is planned for May-June.
But in response, the Saudi energy minister told Reuters he did not see a need to hold an OPEC+ meeting in May-June if there was no agreement on what measures should be taken to deal with the impact of the coronavirus outbreak on oil demand and prices.
“I fail to see the wisdom for holding meetings in May-June that would only demonstrate our failure in attending to what we should have done in a crisis like this and taking the necessary measures,” Prince Abdulaziz bin Salman Al Saud said.