Oil up on hope of a Saudi Arabia, Russia deal

Oil prices rallied in Asia on Thursday morning, as hopes rise for a truce between Saudi Arabia and Russia in their ongoing price war.

International Brent Oil Futures rose 0.7% to $25.79 by 9:43 PM ET (2:43 AM GMT) and U.S. Crude Oil WTI Futures jumped 3.64% to $21.05, reversing losses in the last session.

US President Trump said at a press conference yesterday that he expected the two producers to come to an agreement within the next few days.

“It’s very bad for Russia, it’s very bad for Saudi Arabia. I mean, it’s very bad for both. I think they’re going to make a deal,” he added.

While not a major directional driver today, the Energy Information Administration (EIA) said overnight that crude inventories rose by 13.8 million barrels last week, a weekly build last seen four years ago.

EIA’s report was in sync with American Petroleum Institute (API)’s Wednesday report of a 10.485-million-barrel build.

Meanwhile, oil demand continues to shrivel as the number of COVID-19 cases globally shows no sign of decreasing and investors are buckling up for another tough month.

“Global inventories will be chock full by mid-May. I think the market can continue to decline further,” Gene McGillian, a broker and oil analyst at Tradition Energy, told CNBC.

“There’s no signs of rapprochement with producers and with further demand destruction we could get another $5 taken from the market,” he added.

Rystad Energy’s Bjornar Tonhaugen was also pessimistic, telling CNBC, “April will be one of the toughest months in history for oil, and this is no April fool’s joke. The market is oversupplied in April to the tune of 25 million barrels per day. There’s nowhere to hide from this tsunami of oversupply.”