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U.S. oil prices rebounded sharply on Tuesday, after falling to the lowest level since 2002 amid a demand slump due to the coronavirus pandemic and a glut of supply thanks to a Russia-Saudi oil-price war.
West Texas Intermediate crude CLK20, +5.67% jumped over 5%, or $1, to $21.17 a barrel, after briefly dipping below the psychologically important $20-a-barrel level on Monday. The May contract tumbled 6.6% to settle at $20.09 a barrel on the New York Mercantile Exchange.
The global benchmark, May Brent crude BRNK20, +1.80% rose 42 cents, or 1.5%, to $26.82 a barrel, after an 8.7% slump to $22.76 a barrel on ICE Futures Europe, ahead of the front-month contract’s expiration at Tuesday’s settlement. WTI marked its lowest finish since February 2002, while Brent saw its lowest settlement since November of that year, according to Dow Jones Market Data.
The rebound Tuesday came as U.S. stock futures and European equities also, rose after China’s official purchasing managers’ indexes both beat expectations, and slowing new coronavirus cases in places like Italy. Wall Street equities saw another upbeat session on Monday, driven by health-care stocks and hopes for a vaccine.
“A joint action from oil producer countries to lower production could encourage a certain recovery in oil prices,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note to clients. “But any supply-side intervention should be sizable to match the historical decline in demand, with an estimated 5 million barrels decline in daily oil demand only due to grounded planes globally.”
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