Oil prices climb $1 as steep declines attract bargain buyers
Oil gained over $1 on Tuesday as investors began bargaining due to recent steep declines in prices caused by the pandemic and the Saudi Arabia-Russia price war. However, fears of recession still loom over the market.
Brent crude went up 1.8%, or 55 cents, at $30.60 per barrel, following a high of $31.25.
U.S. West Texas Intermediate crude gained 3.7%, or $1.06, at $29.76, after falling from $30.21 high.
The United States said that they will use the low oil prices to fill up its Strategic Petroleum Reserve. Other countries and companies have also taken these into consideration.
Due to weak global demand, Saudi Arabia and Russia have started a price war after the cut agreement between OPEC+ failed to concretize.
Saudi Aramco said it will proceed with higher oil production for April and May, and that $30 per barrel of oil was “very comfortable.”
Canada and the United States, as well as some parts of Europe and Asia have taken measures to contain the virus, resulting in an even weaker demand for crude, gasoline, and jet fuel.
Gasoline refining margins in the U.S. fell nearly 95% on Monday.
President Donald Trump said that the economic disruptions caused by the virus as well as the measures imposed to contain it could lead to a recession.
Margins for transportation fuels in Asia declined to multi-month and multi-year lows following various countries’ implementation of travel bans and restricted domestic movements as a measure to contain the spread of the virus.