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Oil Surges by More Than 7 on Hopes for New Incentives

Oil prices managed to recover losses on Tuesday, soaring by more than 7 percent after a record drop over almost 30 years during the previous settlement, triggered by a price war between the leading producers – Saudi Arabia and Russia.

oil prices recoverPhoto: Pixabay

U.S. President Donald Trump said on Monday that he would take “significant” steps to protect the domestic economy from the effects of the virus outbreak and will discuss lower payroll taxes with Congressional Republicans on Tuesday.

The International benchmark for Brent crude added 3.90 percent, to $35,72 per barrel, while WTI crude futures  added 4.50 percent, to $32,48 per barrel at 0842 GMT.

Recall, both benchmarks decreased by 25 percent on Monday, reaching a record low since February 2016 and fixing a record one-day percentage drop since January 17, 1991.

At the same time, the price reverse may be of short-term nature, as the economic consequences of the Covid-19 outbreak continue to exert pressure on oil demand, sector analysts said.

Monday’s prices tumbled by ⅓  following the measures taken by Saudi Arabia after Russia refused to cut production deeper, according to OPEC’s offer in order to stabilize oil markets.

OPEC+ could not agree to extend the last terms agreement in connection to oil production lowering and new restrictions.

Saudi Arabia has reduced export prices and plans to increase production above 10 million barrels per day in April from 9.6 million barrels per day in recent months.

World oil demand will decline in 2020 for the first time in more than a decade due to the decrease in economic activity caused by the virus spread, the International Energy Agency said on Monday.

Source: Reuters