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Crude oil prices staged a rebound on Tuesday after President Donald Trump said that the White House and Congress would meet to consider a ‘very substantial’ economic relief measures to combat the coronavirus, which may include a payroll tax cut.
West Texas Intermediate crude for April delivery CL.1, +4.59% rose $159, or 5%, to $32.67 a barrel. On Monday, oil fell $10.15, or 24.6%, to end at $31.13, after briefly trading below $29 in early trade. May Brent crude BRNK20, +4.74%, the global benchmark, rose $1.73, or 5%, to $36.08 a barrel. On Monday, the contract plunged $10.91, or 24.1%, to settle at $34.36 a barrel on ICE Europe.
Monday’s percentage declines for both grades were the largest since January 1991, during the Gulf War. Tumbling oil prices came after Saudi Arabia over the weekend cut its export prices for crude, in a move many saw directed at Russia.
The Organization of the Petroleum Exporting Countries had been pushing for members and Russia-led allies to deepen existing cuts by 1.5 million barrels a day. But Moscow rejected that move in talks that collapsed Friday without an agreement, meaning existing curbs will expire at the end of March and OPEC members and nonmembers can pump freely.
The potential of a Saudi-Russia price war combined with concerns over the spreading coronavirus in the U.S. to trigger chaotic financial markets on Monday. But oil rebounded Tuesday, with Asian marketsrising and European stocks pointing to gains, alongside a 600-point gain for Dow YM00, +2.30% fter Trump came forward with the outline of a relief plan.
Also helping risk appetite was a visit by Chinese President Xi Jinping on Tuesday to Wuhan, believed to be at the epicenter of the coronavirus and hardest hit by the epidemic. Reuters reported that Nigeria’s oil minister has pledged in the short term to ratchet up its oil output to over 2 million barrels per day to help compensate for the price plunge.
On Monday, the Dow DJIA, -7.78% closed down 2,013.76 points, or 7.8%, at 23,851.02, while the S&P 500 SPX, -7.59% fell 225.81 points, or 7.6%, to end at 2,746.56, near its session low. The Nasdaq Composite Index COMP, -7.28% plunged 624.94 points, or 7.3%, to finish at 7,950.68.
