Oil jumped more than 30% on Wednesday, reversing steep losses after a volatile overnight trading session which saw international benchmark Brent crude fall to its lowest level in more than 20 years.
West Texas Intermediate, the U.S. benchmark, rose $3.59, or 31%, to trade at $15.16. Earlier in the session WTI had traded as low as $10.26, before jumping more than 40% to hit a session high of $16.20. Brent crude traded 10.8%, or $2.08, higher at $21.41, after previously breaking below $16.
Given oil’s more than 70% decline this year a smaller gain, of course, now accounts for a much larger percentage move. At the begging of the year WTI fetched more than $60 per barrel, but the fall-off in demand caused by the coronavirus pandemic has sent prices tumbling.
On Wednesday, U.S. President Donald Trump tweeted that he'd sent instructions to the Navy to shoot down Iranian gunships who might "harass our ships at sea.”
The situation has created an extreme demand shock in the energy market. The International Energy Agency forecast in its closely-watched monthly report that demand in April could be 29 million barrels per day lower than a year ago, hitting a level last seen in 1995.
It's particularly acute, with storage facilities at the country’s main delivery point in Cushing, Oklahoma expected to be full within weeks.
The Cushing storage hub was reported to be 77% full as of April 17, according to analysts at Goldman Sachs, with the last two-week builds "pointing to a stock-out by the first week of May."
