Crude oil prices rose more than $1 on Tuesday as the recent sharp falls due to the coronavirus pandemic encouraged bargain hunters to come forward, although the market remains volatile as the spread of the infection disrupts economies and hurts demand.
Brent crude was up 1.5 per cent, or 46 cents, to $30.51 a barrel by 0206 GMT (7:36 am in India), after hitting a high of $31.25.
US West Texas Intermediate (WTI) crude rose 3.2 per cent, or 92 cents, to $29.62, having come off a high of $30.21.
“Presumably, the market is getting supported by physical bargain hunters and short covering,” said Stephen Innes, chief markets strategist at AxiCorp.
The US has said it will take advantage of low oil prices to fill its Strategic Petroleum Reserve (SPR), and other countries and companies are planning similar measures to fill storage tanks.
“But those storage facilities are rapidly filling. If storage does fill, quashing that demand, oil prices are sure to collapse further, and the global markets will then have to hope that the dispute between Saudi Arabia and Russia is resolved before we reach that point of no return,” Mr Innes said.
Amid heavy demand loss from the global spread of the virus that causes COVID-19, Saudi Arabia and Russia started a price war after failing to agree to extend their pact to cut output to support the market.
Saudi Aramco has said this week it would likely carry over its planned higher oil output for April into the following month, and that it was “very comfortable” with an oil price of $30 a barrel.
Several countries – including the US and Canada, and nations in Europe and Asia – are taking unprecedented steps to contain the virus, severely crippling demand for crude and refined products such as gasoline and jet fuel.
Gasoline refining margins in the United States, the world’s largest gasoline consumer, plunged around 95 per cent on Monday – briefly turning negative – with fuel prices plunging faster than crude oil in anticipation of coronavirus prevention measures keeping people off the road and in their homes.