After a three day continuous sell off, the global oil prices rose up by seven percent as the supplies for coronavirus experienced a massive demand for them to be trasported to Russia and Saudi Arabia.
Benchmark Brent, which in less than two weeks had lost half its value, got some relief as investors across financial markets finally assessed the result of massive central bank stimulus measures.
Achieving its lowest level since 2003, Brent crude LCOc1 jumped $1.43, or 5.75%, to $26.33 a barrel by 1045 GMT, after plunging to $24.52 on Wednesday. U.S. crude CLc1 gained $2.40, or 11.8%, to $22.77 after dropping nearly 25% in the previous session to an 18-year low.
Industry experts have however said that this rise in price is only temporary as the growing demand will again be hit by a major collapse as supply curbs take place between the OPEC and the non-OPEC countries.
“From April 1, about 4 million bpd could flood the markets, potentially pushing down crude oil prices into the teens,” Jefferies said in a note. “Unless somebody intervenes, no oil producer benefits from the current environment.”
In the United States, where dozens of shale oil and gas drillers and services companies risk bankruptcy, senators on Wednesday have urged Russia and Saudi Arabia to stop the price war during talks with the kingdom’s envoy to Washington.
“While the spreading of the virus has further to go and oil prices further to drop, we are now probably getting very close to peak fear in western and global financial markets,” said Bjarne Schieldrop, chief commodities analyst at SEB.
Central banks have moved to mitigate the circling financial and economic fallout, with the European Central Bank giving out 750 billion euro ($820 billion) emergency bond purchase scheme after a meeting that was unscheduled on Wednesday.
The Coronavirus effect elsewhere in different parts of the world is not showing any signs of containment with over a million people affected all across the world with more than 3000 casulties.