Covid-19: Oil resumes rally as producers move toward deal to curb output
Oil resumed gains on signs the world’s biggest producers are moving toward a deal to call off their price war and cut output as the coronavirus eviscerates energy demand around the world.
Futures in New York rose to around $27 a barrel, resuming a rally interrupted by an 8% decline on Monday. Energy Secretary Dan Brouillette held a “productive discussion” over the phone with his Saudi counterpart Prince Abdulaziz bin Salman, the U.S. government said. Crude was also buoyed by improved sentiment in broader financial markets after the reported death tolls in some of the virus hotspots in Europe showed signs of easing.
A virtual meeting of producers from the OPEC+ alliance and beyond -- which has been delayed once already -- is tentatively scheduled for Thursday afternoon in Vienna. A gathering of G20 energy ministers is set to follow on Friday to discuss wider contributions to a production agreement.
While the talks still face significant obstacles, not least whether the U.S. will participate, the bigger question is whether any deal will be enough given the extent to which the virus is destroying demand. In another sign of the growing glut, industry data provider Genscape Inc. reported a 5.8 million-barrel rise in crude inventories at Cushing, Oklahoma, last week, which would be the largest in data going back to 2004 if confirmed by official figures due Wednesday.
West Texas Intermediate for May delivery rose 3.4% to $26.97 a barrel on the New York Mercantile Exchange as of 8:34 a.m. in Singapore. The contract has rallied 32% so far in April after plunging 54% in March.
Brent for June delivery added 2% to $33.70 a barrel on the ICE Futures Europe exchange after dropping 3.1% Monday. The global benchmark traded at a $2.91 premium to WTI for the same month.