The benchmark barrel price in the United States rose more than 26% this Wednesday. The day after it collapsed after a major US oil fund sold short-term black gold contracts.
WTI gained 29% to $16 a barrel in e-commerce. It fell more than 21% on Tuesday after the US fund United States Oil Fund (USO) began selling its short-term oil contracts.
The price of a barrel of Brent oil for June delivery maintains the upward trend it registered the day before. It rose 7.26% in the London futures market to $24.38.
After several sessions of sharp declines, Brent for June delivery – whose futures expire tomorrow – recovered 2.60% the day before and exceeded $20. Meanwhile, Texas intermediate oil, the benchmark in the US, lost 3.4% and was closed at $12.34 a barrel.
OPEC+ measures will take weeks to manifest on the market
The oil market has been operating catastrophically over the past two months. It started with the price war between Saudi Arabia and Russia.
The coronavirus pandemic caused a further collapse in demand.
Oil prices hit historically low levels this month: the WTI barrel even traded below zero for the first time.
These falls are linked to deficient demand due to restrictions placed on transport and economic activity to prevent the spread of the coronavirus.
Producing countries agreed in mid-April to cut production by 10 million barrels per day from May. As a result, ending the price war between Russia and Saudi Arabia.
However, these measures didn’t succeed in supporting the market. The prospects of an oil market rebound seem dim.
The measures will probably take weeks to manifest on the physical market, so we are still dealing with storage issues, said Stephen Innes, strategist at AxiCorp.
Is the end in sight?
Analysts believe oil prices will bounce back in the medium to long term. The appearance of the coronavirus epidemic has added a twist to the natural cycle of things.
The length of the coronavirus lockdown and the subsequent economic recovery will be the main factor behind the trajectory of oil prices. The sooner it becomes possible to deal with the pandemic, the sooner demand will bring the prices of oil to an equilibrium.
Analysts think that April’s negative prices for WTI should not be an indicator of oil prices staying at this level for an extended period.
Brent prices are predicted to remain in the low to mid-20s for the spring and summer.