Oil jumps after rout on stimulus hopes, Russian signal on OPEC talks

London

Oil prices jumped by around 8 per cent yesterday a day after the biggest rout in nearly 30 years as investors eyed the possibility of economic stimulus and Russia signalled that talks with OPEC remained possible. Brent crude futures LCOc1 were up $2.80, around 8pc, to $37.16 a barrel by 1354 GMT, after hitting a session high of $38.22 a barrel.

West Texas Intermediate (WTI) crude CLc1 gained $2.42, or around 8pc, to $33.55 a barrel, after hitting a high of $34.60. Saudi said it plans to supply 12.3 million barrels per day (bpd) in April, well above current production levels of 9.7 million bpd, Saudi Aramco CEO Amin Nasser said yesterday.

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, Price pared gains by over a $1 on the news. Russian oil minister Alexander Novak said he did not rule out joint measures with OPEC to stabilise the market, adding that the next OPEC+ meeting was planned for May-June.

But in response, Saudi Arabia’s energy minister said 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 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 said. “Price wars and pandemics are nothing new to the commodity markets, but both occurring simultaneously is something we have yet to witness in our careers,” RBC analysts said in a note. “Such action will test the market’s self-balancing mechanism absent the backstop of OPEC, a mechanism that has not been tested since the U.S. shale boom was in its infancy,” they added.

Sentiment was also lifted after Chinese President Xi Jinping visited Wuhan, the epicentre of the coronavirus outbreak, for the first time since the epidemic began, and as the spread of the virus in mainland China slows sharply