By Adedapo Adesanya
Oil prices made a recovery on Tuesday morning after crashing on Monday as a result of renewed fears. Business Post reports that futures recorded up to nine percent rise this morning as investors eye the possibility of economic stimulus despite a price war between top producers; Saudi Arabia and Russia.
Prices were helped when President Donald Trump on Monday night said he would take major steps to restrain the US economy against the impact of the spreading coronavirus outbreak and will discuss a payroll tax cut with congressional Republicans on Tuesday.
As at the time of writing, Brent crude futures rose $3.26 or 9.49 percent to sell at $37.62 per barrel, while the United States’ West Texas Intermediate (WTI) crude has gained $3.09 or 9.93 percent to trade at $34.22 per barrel.
Business Post reported yesterday that both benchmarks plunged 25 percent on Monday, their lowest and biggest one-day percentage declines since 1991, when oil prices fell at the beginning of the Gulf War.
The market was faced with trouble when Saudi Arabia planned to boost its crude production above 10 million barrels per day (bpd) at the beginning of April from 9.7 million bpd in recent months, and has slashed its export prices to encourage refiners to buy more.
Its former ally turned rival, Russia, also said it could lift output and that it could cope with low oil prices for six to 10 years.
According to analysts, crude was also supported by hopes for a settlement and potential US output cuts, although gains could be temporary as oil demand continues to be hit by the economic impact of the coronavirus outbreak.
Making its projection to adjust to the new development, the Paris-based International Energy Agency (IEA) said oil demand was set to contract by 90,000 barrels per day for the first time in 11 years this year since 2009.
A slowdown in travel has already hit demand in the past few weeks, and a global economic slowdown could depress oil further even with this positive news.
Dipo Olowookere 
Modupe Gbadeyanka