Trump signals oil price war truce as Saudis call OPEC+ meeting

Cornelia Mascio
Aprile 3, 2020

West Texas Intermediate crude oil futures for May delivery touched a session low of $19.90 a barrel, down 2.8 percent, in the moments after the new data was disclosed, though they pared some of the losses later.

Global oil prices have risen after Donald Trump said he expected Saudi Arabia and Russian Federation to reach a deal soon to end their price war.

"Could be as high as 15 Million Barrels", he added in a subsequent post.

However, a spokesperson for Putin said the president did not speak with the crown prince.

"Oil prices failed to keep pace, with growing (coronavirus) lock-down measures and reports that this could drive global demand down 20%, potentially pushing the world to run out of storage capacity", Morgan Stanley analyst Devin McDermott had written in a note earlier this week.

Saudi Arabia was expected to call an emergency meeting of the Organization of Petroleum Exporting Countries.

He added that he expected them to "work it out over the next few days" after he spoke to both countries' leaders. While Wednesday's percentage rise sounds impressive it pales into insignificance when compared to the 65%+ fall in crude in Q1 - over $40/bbl. - its worst quarterly performance in history. The price dispute, which began last month, has driven oil prices to their lowest in 18 years.

China's move helped to boost prices in a week when the oil market experienced an extremely rare situation.

This has resulted in some oils, including Wyoming Asphalt Sour, turning negative on price.

Western Canadian Select had earlier this week traded at "four to five dollars. With the transport cost it means that the price is negative", Per Magnus, head of analysis at Rystad Energy, told AFP.

Shale producer Whiting Petroleum, which was once the largest oil producer in the U.S. state of North Dakota, filed for bankruptcy on Wednesday.

ANZ Bank however said that USA prices were being bolstered also by reports that the United States energy department may rent space in the country's emergency oil reserves to local producers.

"At 469.2 million barrels, USA crude oil inventories are near the five-year average for this time of year", the weekly report said.

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