Oil dips after record rally

Published April 3, 2020, 12:00 AM

by manilabulletin_admin

HONG KONG (AFP) – Crude prices slipped Friday after the previous day’s record surge as traders questioned Donald Trump’s claims that Russia and Saudi Arabia were set to slash output, while Asian equities were mixed after another thunderous rise in US jobless claims caused by the virus crisis.

With the number of people with COVID-19 topping a million and the death toll continuing to climb, investors remain hostage to uncertainty as they try to gauge the long-term economic impact of the pandemic, which is widely expected to plunge the planet into recession.

However, with trillions of dollars pledged in government support, the wild volatility that characterised markets at the start of the crisis has given way to some form of stability.

And providing a much-needed shot in the arm Thursday was a tweet by Trump that said Moscow and Riyadh could slash output to end their vicious price war, which sent crude prices to near-two decade lows last month.

Trump said he had spoken to Saudi Crown Prince Mohammed bin Salman, who he claimed had spoken with Russian President Vladimir Putin.

”I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe sub-stantially more which, if it happens, will be GREAT for the oil & gas industry!” said Trump.

”Could be as high as 15 Million Barrels,” he added in a subsequent post.

The news sent crude soaring, with Brent at one point rising almost 50 percent and WTI around 35 percent. Brent eventually pared gains to end up 21 percent and WTI 25 percent, still a record jump for either contract.

However, doubts began to grow after the Kremlin denied Putin had spoken to the crown prince.

Saudi Arabia, for its part, did call for a meeting of OPEC and other major producers led by Russia to ”stabilise the oil market”, just one day after the kingdom boosted supplies to record levels.

”This could of course be a very substantial development, even in view of the massive oversupply of 25 million barrels a day that the market is currently facing,” Magnus Nysveen, head of analysis at industry consultant Rystad Energy, said.

The deal ”sounds too good to be true”, he added.

Both main contracts gave back some of their gains Friday.

Equity markets were choppy despite a healthy lead from Wall Street as traders absorbed data showing a whopping 6.7 million US workers applied for unemployment benefits last week, on top of the 3.3 million the week before as the coronavirus forced businesses nationwide to close their doors.