US Crude Oil WTI Futures traded 2.7% higher to $32.35 by 12:30 AM ET (04:30 GMT). International Brent Oil Futures gained 2.4% to $34.02.
Oil prices recovered today after the Federal Reserve moved to provide $1.5 trillion in short-term liquidity and changed the durations of Treasuries it buys.
Some expect the central bank to go even further and cut rates again next week when officials meet.
Goldman Sachs (NYSE:GS) said today it now expects the Fed to cut by 100 basis points at the meeting, down to a range of 0% to 0.25%, in “light of the continued growth in coronavirus cases in the US and globally, the sharp further tightening in financial conditions, and rising risks to the economic outlook”.
Despite today’s gains, oil markets plummeted almost 30% this week after Saudi Arabia and Russia decided not to cut production further and instead sell at lower prices, raising fears of a price war.
“Oil prices are about to get uglier,” said Ed Moya of online trading platform OANDA. “As the Saudis and Russians ramp up production, a key super-contango threshold has been reached, suggesting another plunge is upon us.”
Meanwhile, yesterday’s US decision to ban travel from some European countries as President Donald Trump’s main tactic to combat COVID-19 also dealt a blow to investor sentiment.
“There was an oil surplus before the coronavirus and there is now even more of that surplus, not only because the demand gets lower every day but also because the supply is getting larger too,” said Igor Windisch of the IBW Oil Brief. “So this crash is not panic, it is pure logic – and this is the only reassuring fact, really.”
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