Oil prices are bouncing back as traders turn their attention to the upcoming virtual meeting between Saudi Arabia and Russia.
West Texas Intermediate crude oil, the U.S. benchmark, climbed 3.6 percent to $24.47 a barrel. Brent crude, the international benchmark, rose 0.7 percent to $32.08
Russia and Saudi Arabia are set to hold a virtual meeting to discuss production cuts that President Trump has suggested could total 10 million barrels per day.
“Look for at least 10 million and a commitment from non-OPEC of 3 million more,” Phil Flynn, senior market analyst at the Price Futures Group, told FOX Business. “If prices get worse, it could cause long-term harm to the global economy.”
WTI crude oil has plunged 63 percent from its Jan. 6 peak as the price war between Russia and Saudi Arabia worsened a supply glut amid a period of severe demand destruction caused by the COVID-19 pandemic.
Following the meeting between OPEC and its allies, energy ministers of G20 nations will meet Friday to discuss the economic damage and the sharp drop in oil prices. The fallout has “cost us future supply that we will need desperately in a few years,” Flynn said.
Weekly inventory data from the American Petroleum Institute released Tuesday evening showed crude stockpiles increased by 11.94 million barrels in the week ended April 3, more than the 9.3 million barrels that analysts and traders surveyed by The Wall Street Journal were expecting. Last week, inventories swelled by 10.49 million barrels.
The inventory build followed the release of an updated 2020 outlook from the Energy Information Administration that projected global demand will fall by 5.2 million barrels a day as inventories swell by 3.9 million barrels. The EIA sees Brent crude averaging $33 this year – $10 below last month’s forecast. EIA officials also forecast the U.S. will become a net importer of crude oil in the third quarter.
“Did the Saudis win? Maybe,” wrote Stephen Schork, founder and editor of the daily oil subscription newsletter The Schork Report.
“Per yesterday’s forecast from the EIA, the government now expects the U.S. will return to being a net importer of oil (crude oil + petroleum products) in the third quarter of 2020," he wrote. "This will be the first time since June 2011 the U.S. will be a net importer of oil. That certainly sounds like a victory.