Oil prices experienced some recovery on Thursday morning after a rather concerning week which saw oil prices drop to 18-year lows amid the coronavirus outbreak and ongoing price war between Russia and Saudi Arabia.
The recent uptick in global oil prices was influenced by a recent statement by U.S President Donald Trump regarding a possible truce between Russia and Saudi Arabia. The two countries have been increasing their oil production and slashing prices as part of the price war. This has contributed significantly to the rapid decline in the value of oil over the past few weeks.
Of course, the situation was also exasperated by the fact that there is currently a viral outbreak of the coronavirus, leading to a global pandemic. This situation has resulted in self-isolation and quarantine as people have been urged to stay home to help curb the spread of the virus. Consequently, the demand for fuel has gone down and even the airline industry has grounded flights.
WTI Crude has so far surged by 9.16 percent on Thursday morning after President Trump’s statement. The WTI Crude price per barrel stood at $22.13 which is a noteworthy bullish momentum to kick off April. It may also signify the highly anticipated recovery considering that the week started with the price of WTI Crude oil hitting sub-$20 levels per barrel.
Will the oil prices sustain the bullish momentum?
At this point is it is hard to tell whether oil prices will continue to surge. The expectation of a truce to end the price war may have created some positive expectations among investors and thus the uptick. A truce might be a significant step in the right direction and one that will benefit the entire oil industry. However, the underlying issue remains.
The coronavirus’ negative impact on the oil industry is still a major concern especially since the viral threat is still active. The demand for oil is still low but perhaps China’s recovery is an indicator that other global economies will follow in the same path.