Oil prices rise 4% after biggest one-day fall since 1991 By Reuters


By Jessica Jaganathan

SINGAPORE (Reuters) – Oil prices rose by more than $1 on Tuesday after a price war by top producers Saudi Arabia and Russia sparked the biggest daily rout since the 1991 Gulf War, but investors saw little chance of a quick price recovery as the coronavirus cuts demand.

Saudi Arabia and Russia both said they would raise production at the weekend after a three-year pact between them and other major oil producers to limit supply fell apart on Friday.

futures rose $1.41, or 4.1%, to $35.77 a barrel by 0034 GMT, while U.S. West Texas Intermediate (WTI) crude gained $1.25, or 4%, to $32.38 a barrel following declines of nearly 25 percent on Monday.

Both benchmarks dropped to their lowest since February 2016 in the previous session and recorded their biggest one-day percentage declines since Jan. 17, 1991, when oil prices fell at the outset of the U.S. Gulf War.

Trading volumes in the front-month for both contracts hit record highs in the previous session.

But analysts do not expect oil prices to regain the nearly 25% slump from Friday’s close as the coronavirus outbreak cuts demand.

“Oil prices rarely stay below the marginal cash cost of supply. But with the anticipated inventory build in (the first half) we struggle to find conviction in a snap back for oil,” analysts from Bernstein Energy said in a note.

Energy stock prices have also fallen sharply, and shale producers began cutting spending in anticipation of lower revenues. Exxon (NYSE:) shares lost more than 12%, the largest one-day percentage loss since Oct. 15, 2008, the height of the financial crisis. Chevron’s shares fell more than 15%, the biggest loss since the October 1987 “Black Monday” market crash.

Saudi Arabia plans to boost its crude output above 10 million barrels per day (bpd) in April from 9.7 million bpd in recent months, two sources told Reuters on Sunday. The kingdom slashed its export prices at the weekend to encourage refiners to buy more.

Russia, one of the world’s top producers alongside Saudi Arabia and the United States, also said it could lift output and that it could cope with low oil prices for six to 10 years.

One the demand side, the International Energy Agency said oil demand was set to contract in 2020 for the first time since 2009. The agency cut its annual forecast and said that demand would contract by 90,000 bpd in 2020 from 2019.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function()
{n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘751110881643258’);
fbq(‘track’, ‘PageView’);

by : Reuters

Source link

Capital Media

Read Previous

le régulateur télécoms épinglé pour plus de 4 milliards FCFA d’irrégularités financières

Read Next

China February PPI -0.4% year-on-year, CPI +5.2% By Reuters