By Adedapo Adesanya
Oil markets witnessed recovery on Tuesday, holding firm throughout the day as there were reports that members of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies could continue talks.
This led Brent crude futures, the international benchmark, up by 10.73 percent or $3.53 to trade at $37.89 per barrel. Likewise, the US West Texas Intermediate (WTI) crude registered a gain of $3.52 equivalent to 10.27 percent to sell at $34.65 per barrel.
Prices crashed on Monday by over 25 percent when faced with pressure from price cuts made by Saudi Arabia after plans for a 1.5 million barrels daily reduction with non-OPEC ally, Russia failed at a meeting last week.
However, optimism was renewed when Russian Energy Minister, Mr Alexander Novak, said that the producer had not ruled out measures with OPEC to stabilize oil markets and could return to the table.
He added that the next meeting between the OPEC+ is planned for May-June but this was disputed by Saudi Arabia, which said it saw no use of a meeting if there was no agreement on what measures should be taken to deal with the impact of the coronavirus outbreak on oil demand and prices.
“I fail to see the wisdom for holding meetings in May-June that would only demonstrate our failure in attending to what we should have done in a crisis like this and taking the necessary measures,” the Saudi Energy Minister, Prince Abdulaziz bin Salman Al Saud said.
Both countries are set to contribute more output daily when the current agreement of 1.2 million barrels per day expires in three weeks. The kingdom plans to supply a record 12.3 million barrels per day (bpd) in April, well above current production level of 9.7 million barrels per day while Russia could produce up to 500,000 barrels per day.
It was observed that oil prices rose on Tuesday when it was hinted that the United States may consider another cut in interest rates, although analysts predict that global oil demand will continue to slump during the coronavirus outbreak, which has spread beyond China and prompted Italy to implement a nationwide lockdown, with cases spreading alarmingly across Europe.
On the supply side, US crude oil inventories rose 6.4 million barrels last week to 453 million barrels, data from industry group, the American Petroleum Institute (API) showed on Tuesday.
There were expectations of 2.3 million barrels but this will be confirmed when the US official government data is released on Wednesday through the Energy Information Administration (EIA).
