Brent reverses losses to rise above $30/bbl in early European trading

Benchmark Brent crude oil futures reversed losses incurred during Asian hours in early European trading on Friday to rise above $30 a barrel, with hopes of a huge global supply cut deal to support prices still alive.

Brent crude futures were up 7%, or $2.10, at $32.04 per barrel by 0748 GMT. Brent soared as much as 47% during Thursday’s session, its highest intraday percentage gain ever, before closing 21% higher, but still at less than half the $66 it was trading at at the end of 2019.

U.S. West Texas Intermediate (WTI) crude also moved back into positive territory, rising 1%, or 28 cents, to $25.6 a barrel, after surging 24.7% on Thursday.

U.S. President Donald Trump said on Thursday he had brokered a deal which could see Russia and Saudi Arabia cutting output by 10 to 15 million barrels per day (bpd) – an unprecedented amount representing 10% to 15% of global supply. Trump said he had made no offer to cut U.S. output.

Saudi Arabia called on Thursday for an emergency meeting of OPEC and non-OPEC oil producers, saying it aimed to reach a fair agreement to stabilise oil markets. Kuwait’s oil minister Khaled al-Fadhel said on Friday he supported Saudi Arabia’s invitation for a meeting between OPEC and non-OPEC oil producers.

The energy ministry of non-OPEC producer Azerbaijan, meanwhile, said the OPEC+ meeting is planned for April 6 and will be held as a video conference, Russia’s RIA news agency reported. UBS analysts said they were sceptical that producers can credibly commit to large cuts and expected oil prices to come under pressure again.

Saudi could drop production down to around 8.5 million bpd but would likely be reluctant to go below that level because of the desire to maintain associated gas production, while Russia will likely look for some measure of sanctions relief from Washington, said Helima Croft, global head of commodity strategy at RBC Capital Markets.

Washington will not ask U.S. domestic oil companies for a coordinated cut in production and is still awaiting the details of planned cuts in Saudi Arabia and Russia, a senior administration official told Reuters.

With the coronavirus pandemic worsening, Citi analysts forecast a decline in global oil demand in the second quarter of 18-20 million bpd, which in turn should see refinery runs collapse by over 2 million bpd triggering an unprecedented growth in inventory of some 1 billion barrels over two months.

Brent reverses losses to rise above $30/bbl in early European trading,