Oil prices skyrocketed on Thursday, posting their largest one-day percentage gains in history after Trump’s tweet signaling that Saudi Arabia and Russia had agreed to slash production and end the price war. The gains, however, were capped later in the day after Moscow denied it had talked with Riyadh regarding the deal.
According to Trump, both countries had agreed to reduce output by 10 to 15 million barrels. Such significant cuts, however, might need participation from other OPEC and non-OPEC producers. Meanwhile, Saudi state media reported that the kingdom would call an emergency OPEC meeting to address the market turmoil.
Following Trump’s statement, Brent futures LCOc1 was up by nearly 46% to $36.29/barrel, while US WTI crude CLc1 soared by about 35% to $27.39/barrel. The prices, however, retreated after the Kremlin’s spokesman Dmitry Peskov said that Russia had so far no plans for such talks. Brent increased $5.20 (21.0%) to $29.94/barrel, while WTI gained $5.01 (24.7%) to $25.32/barrel.
Despite the massive increase, Brent and WTI have still lost more than 50% so far this year. Besides, the coronavirus pandemic is still expected to keep putting weight on fuel demand. Some analysts expected that the demand would tumble by 20%-30% in the coming months. Oil producers are now facing mounting pressure to reach a deal.
