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Majnoon Oilfield in Iraq

Oil prices recover; crude rises above $30

LONDON, March 17, 2020 – Oil prices rose in morning trade in Asia Tuesday, recovering from recent sharp losses due to the coronavirus outbreak and uncertainties surrounding the price war between Saudi Arabia and Russia.

Crude Oil WTI Futures rose 3.83% to $30.11 by 11:55 AM ET (03:55 GMT). International Brent Oil Futures gained 1.90% to $30.62. Oil prices plunged below $30 on Monday as US markets suffered their worst losses in three decades.

Gains of the oil prices were limited today as more countries announced COVID-19 lockdowns. Airlines are cutting the number of daily flights amidst increasing numbers of countries announcing quarantines to fight the new coronavirus. Canada and Malaysia are the two most recent countries to restrict arrivals and close their borders.

US President Donald Trump said overnight that economic disruptions from the spread of the coronavirus and measures taken against it could lead to a recession.

 

Presumably, the market is getting supported by physical bargain hunters and short covering,” Stephen Innes, chief markets strategist of AxiCorp, told Bloombergin an interview.

Some demand has come from the US and other countries filling strategic storage but that might not support prices for much longer.

“Those storage facilities are rapidly filling. If storage does fill, quashing that demand, oil prices are sure to collapse further, and the global markets will then have to hope that the dispute between Saudi Arabia and Russia is resolved before we reach that point of no return,” Innes said.

Adding to oil’s woes is the ongoing price war between Saudi Arabia and Russia, two of the world’s biggest oil producers. Saudi Arabia’s Saudi Aramco threw down the gauntlet, with Chief Executive Officer Amin Nasser telling investors that the company is “very comfortable with oil prices below $30 a barrel”.

The company has plans to produce at maximum capacity of 12 million barrels a day next month and there are no changes forecast for May.

“There is no constructive bullish case to be made for oil right now,” Jeffrey Halley, senior market analyst, told Bloomberg. “I think Brent will settle between $25-$30 a barrel range from here.”

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