• Tuesday, May 28, 2024
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BusinessDay

Oil rebounds to $26, after dropping to 18-Year Low

Oil industry

The price of Brent crude rallied on Thursday to $26 after plunging to the lowest level in 18 years as countries around the globe try to strengthen economies against the effect of the coronavirus pandemic.

Brent gained by $1.37, or 5.5percent to $26.25 on London’s ICE Futures Europe exchange after settling at the lowest since May 2002 of $22.

“We are heading into the most oversupplied market in the history of the oil market,” said DNB Bank ASA senior analyst Helge Andre Martinsen. “We might hit full utilization of global oil inventories in the months to come.”

For Oil and gas producers, the rebound in the oil price will come as a sight of relieve after Brent crude oil saw a further sell-off to lows not seen since 2003, sending prices below cashflow breakeven rates.

The coronavirus pandemic has caused global travel to collapse, eating into the world’s once-insatiable thirst for oil, which powers the economy. Countless flights have been cancelled.

At the same time, Russia and Saudi Arabia picked a terrible time to step away from roles as price stabilizers.