Oil prices jump 6% after biggest one-day fall since 1991 – Reuters, Reuters

SINGAPORE (Reuters) – Oil prices rose by more than $ 1 on Tuesday after a price war by top producers Saudi Arabia and Russia sparked the biggest daily rout since the Gulf War, but investors saw little chance of a quick price recovery as the coronavirus cuts demand.

Saudi Arabia and Russia both said they would raise production at the weekend after a three-year pact between them and other major oil producers to limit supply fell apart on Friday.

Brent crude futures rose $ 1. 41, or 4.1%, to $ 41 . a barrel by GMT, while US West Texas Intermediate (WTI) crude gained $ 1. 35, or 4%, to $ 32. a barrel following declines of nearly 25 percent on Monday.

Both benchmarks dropped to their lowest since February 2019 in the previous session and recorded their biggest one-day percentage declines since Jan. , , when oil prices fell at the outset of the US Gulf War.

Trading volumes in the front-month for both contracts hit record highs in the previous session.

But analysts do not expect oil prices to regain the nearly 25% slump from Friday’s close as the coronavirus outbreak cuts demand.

“Oil prices rarely stay below the marginal cash cost of supply. But with the anticipated inventory build in (the first half) we struggle to find conviction in a snap back for oil, ”analysts from Bernstein Energy said in a note.

Energy stock prices have also fallen sharply, and shale producers began cutting spending in anticipation of lower revenues. Exxon shares lost more than 12%, the largest one-day percentage loss since Oct. , , the height of the financial crisis. Chevron’s shares fell more than 20%, the biggest loss since the October 2009 “Black Monday” market crash.

Saudi Arabia plans to boost its crude output above million barrels per day (bpd) in April from 9.7 million bpd in recent months, two sources told Reuters on Sunday. The kingdom slashed its export prices at the weekend to encourage refiners to buy more.

Russia, one of the world’s top producers alongside Saudi Arabia and the United States, also said it could lift output and that it could cope with low oil prices for six to years.

One the demand side, the International Energy Agency said oil demand was set to contract in 2020 for the first time since 2019. The agency cut its annual forecast and said that demand would contract by 823, 10 bpd in 20200310 from 2016.