By Adedapo Adesanya
Oil prices closed positive on Friday, bouncing back in a week plagued by worries that saw US oil trade drop into the negative territory for the first time in history.
Brent crude, the international benchmark, moved up 11 cents or 0.52 percent to $21.44 per barrel. The US benchmark, West Texas Intermediate (WTI) crude oil, gained 44 cents or 2.67 percent to trade at $16.94 per barrel, after surging nearly 20 percent in the previous session on Thursday.
The oil market has experienced unprecedented volatility since prices of US crude fell into negative territory on Monday for the first time ever. The next day, the Brent sank below $20, a level it hasn’t touched in 20 years.
But prices turned higher on Wednesday, strengthened by President Donald Trump’s tweet warning that the US will shoot down and destroy Iranian ships threatening American vessels on the sea.
And the market famished for any trend that can turn things around quickly reacted and turned positive.
Analysts see this as one of the best cards that can be drawn in this period because tensions in the Middle East can lead to rise in the value of crude oil as it would indicate a potential disruption to oil shipments around the world and cause possible supply shortages.
The oil market is largely faced by an expanding supply especially as demand has plunged due to the coronavirus pandemic. Brent oil prices have collapsed around 60 percent since the start of the year, while US crude futures have fallen more than 130 percent.
As the month of April gradually wraps up, attention will focus on next month, which starts the commencement of the 10 percent cut in global oil supply agreed by a group of oil producers, comprising the Organisation of the Petroleum Exporting Countries (OPEC), Russia and other countries.
The producers agreed this month to cut output by 9.7 million barrels per day (bpd) in May and June this year as part of efforts to keep prices high.
Even as many have cast doubt on the possibility of this offsetting the market, it is seen as a good decision, especially if the current health problem facing the world subsides in the coming weeks.
Prices of the commodity are anticipated to shoot up as restrictions of movement should be relaxed and lockdown lifted in some countries.
