Oil comeback accelerates, futures now up more than 20%

Oil jumped 40% at the high on Wednesday, reversing steep losses after a volatile overnight trading session which saw international benchmark Brent crude fall to its lowest level in more than 20 years. West Texas Intermediate, the U.S. benchmark, rose $2.33, or 21.5%, to trade at $13.90 per barrel. Earlier in the session WTI had traded as low as $10.26, before jumping more than 40% to hit a session high of $16.20. Brent crude traded 6.9%, or $1.34, higher at $20.67, after previously breaking below $16.

Given oil’s more than 70% decline this year a smaller gain, of course, now accounts for a much larger percentage move. At the begging of the year WTI fetched more than $60 per barrel, but the fall-off in demand caused by the coronavirus pandemic has sent prices tumbling.

On Wednesday President Donald Trump said in a tweet that he had “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.” CNBC’s Jim Cramer said this could have contributed to oil’s surge higher as short sellers covered their positions.

Wednesday’s move stood in sharp contrast to the wild downward price action in oil so far this week. On Monday, the WTI contract for May delivery plunged below zero to trade in negative territory for the first time in history. Trading volume was thin since it was the day before the contract’s expiration date, but the move was nonetheless historic. On Tuesday the contract rallied ahead of the settle, to finish trading at $10.01 per barrel.

Meantime the more actively traded June contract fell 43.37% on Tuesday to settle at $11.57 as energy market participants continue to fear that growing oversupply will soon exhaust all the available storage worldwide. Brent dropped 24.4% on Tuesday in its worst daily performance in nearly three decades.

Oil comeback accelerates, futures now up more than 20%, CNBC, Apr 22