Oil costs soared Tuesday as hopes rose that the world’s biggest producers of crude will agree to reduce production as the coronavirus pandemic dents demand, even as analysts warn a global recession may be deeper than expected.
Brent crude was up by 93 cents, i.e., 2.8%, at $33.98 a barrel by after falling over 3% Monday. U.S. crude CLc1 was up by 79 cents, or 3.03%, at $26.87 per barrel, having dropped nearly 8% in the earlier session.
The world’s main oil producers, along with Saudi Arabia and Russia, are likely to agree to reduce production at a meeting Thursday, although that will depend on the U.S. doing its share, sources said.
However, the specter of a major recession looms over the market due to the halt of much financial activity as a result of the coronavirus pandemic, with half the global inhabitants under some form of a lockdown or social distancing measures.
Worldwide oil demand has plunged by up to 30%, i.e., around 30 million barrels per day, coinciding with steps by Saudi Arabia and Russia to flood markets with extra supply after an agreement on withholding production fell apart.
Oil prices plunged Monday after Saudi Arabia and Russia delayed a meeting to agree on output cuts till Thursday.