Oil prices sprang up nearly 7% on Thursday after a three-day low. However, the coronavirus pandemic and oil supply surge still weigh heavily on the market.
According to Reuters, Brent crude LCOc1 jumped up by $1.43, or 5.75%. It stands at $26.33 a barrel, after sinking to $24.52 yesterday. US crude CLc1 gained $2.40, selling at $22.77 per barrel. This 11.8% gain comes after a 25% plummet the day before, reaching an 18-year low.
According to analysts, gains are not expected to last. Oil demand is still crashing due to the Covid-19 pandemic, compounded by the collapse of an agreement for supply cuts proposed by the Organisation of the Petroleum Exporting Countries (OPEC).
Because of this, price war between major oil producers Saudi Arabia and Russia continues to cause oversupply issues. Saudi Arabia is currently pumping at a record rate of 12.3 million barrels per day.
Yesterday, US senators pressured the Saudi Arabian envoy to the US to end the price war. US companies stand to lose millions while oil prices stay low. Separately, senators urged President Donald Trump to impose an official ban on oil from the two countries.
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OANDA New York senior market analyst Edward Moya was quoted by the news agency as saying: “Monetary and fiscal stimulus will do little in returning energy demand back to normal but it will build confidence that the global economy will be in a better position once it is behind the virus.”
Coronavirus global impact
The Covid-19 death toll has increased to more than 8,800 globally. A total of over 218,800 confirmed cases and 84,000 recoveries have been reported as of the end of 18 March.
The World Health Organization noted that 80% of global coronavirus cases were reported in the Western Pacific and European regions.
The agency urged isolation, testing and treatment of every suspected case, along with tracing of every contact, in all countries.