Oil Surges 11% on Saudi Arabia Price Boost Before Erasing Gains
05.11.2020 - NEWS

May 11, 2020 [Market Insider] – Oil prices gained Thursday after Saudi Arabia announced increased prices on almost all grades for June, Bloomberg reported.

 
West Texas Intermediate crude surged as much as 11% Thursday to $26.74 per barrel. The commodity erased those gains in the afternoon, settling roughly 2% lower, around $23.59.

Brent crude gained as much as 7%, to $31.84 per barrel, before settling lower around $29.49. The boosted prices by the kingdom come as OPEC and its allies prepare for record production cuts this month to aid the industry after the coronavirus pandemic tanked global demand.

Oil prices surged Thursday after Saudi Arabia announced that it would raise prices to boost the commodity’s recovery. Later in the day, oil erased those gains and settled lower.

West Texas Intermediate crude surged as much as 11% Thursday to $26.74 per barrel. The commodity erased those gains in the afternoon, settling roughly 2% lower, around $23.59. International benchmark Brent crude gained as much as 7%, to $31.84 per barrel, before settling lower around $29.49.

State-led Saudi Aramco raised prices on almost all grades of oil for June, Bloomberg reported Thursday. The increased prices are a reversal from earlier in the year, when the company offered crude at huge discounts, initiating a price war.

The boosted prices by the kingdom come as OPEC and its allies prepare for record production cuts this month to combat the huge collapse in global oil demand stemming from the coronavirus pandemic.

In mid-April, OPEC and its allies, including Russia, agreed to begin slashing production by 9.7 million barrels a day beginning this month. The historic deal ended a price war that erupted as the coronavirus pandemic cratered global supply, putting additional pressures on the commodity.

“The price increase suggests Saudi Arabia will not just cut their production as part of the OPEC deal, but also reduce their crude exports by making them more expensive,” Giovanni Staunovo, a commodity analyst at UBS, told Bloomberg.
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