WTI Crude Oil Futures Gain Over Hopes for US Intervention in Price War
Amid thin trading volume, WTI crude oil futures continued their climb higher from the previous session early on Tuesday, supported by expectations that the US government will successfully coordinate with Saudi Arabia to improve conditions in the market. At the time of writing, WTI crude oil is trading at around $24.13 per barrel.
Trading volumes in global oil markets, however, remain low on account of the focus on the coronavirus pandemic which has driven down the demand for oil significantly as a result of the shutdowns in place across several countries. Meanwhile, crude oil prices have suffered in recent weeks over Saudi Arabia’s proposal to flood the markets with cheap oil as it gets set for a price war with Russia and other non-OPEC oil producers.
The Trump administration is now attempting to pursue diplomatic options to stabilize oil prices and has confirmed the appointment of a special energy representative to Saudi Arabia to lead the discussions. This development has raised hopes among oil traders for some possible resolution to the price war and a possible prevention of a supply glut amid falling demand in oil markets.
So far this year, crude oil prices have declined by as much as 60% because of the coronavirus crisis, which has sent several countries into lockdown and cut down international travel significantly. With the number of cases continuing to rise, the situation looks unlikely to improve anytime soon, which is likely to further reduce oil demand in the near future.
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