Announced US stimulus plan helps a slight recovery of oil prices

Announced US stimulus plan helps a slight recovery of oil prices

Brent crude was down 92 cents, or 3.4%, at $26.24 US per barrel after earlier rising to a high of $28.29.

U.S. crude touched a high of $25.10 a barrel early in the session and was at $24.61 a barrel, up 60 cents, or 2.5 per cent, by 1243 GMT.

Wednesday's gains came after the Dow surged 11.4 per cent, its biggest one-day percentage increase since 1933, on indications Congress is nearing agreement on a rescue package for the United States economy that could amount to more than USD 2 trillion.

While the bill failed to pass the Senate on Monday, it is expected to give a major boost to the American economy if it clears the floor later Wednesday.

US crude futures fell 21 cents, or 0.9 per cent, to $23.80 a barrel.

However, demand for oil products, especially jet fuel, is falling worldwide as more governments announce nationwide lockdowns, putting a lid on oil prices.

"The extreme imbalance between supply and demand due to the travel restrictions has only just began to unfold in the physical markets, and the true impact will be felt in the coming weeks", said Rystad Energy's head of oil markets, Bjornar Tonhaugen, in a note. Cushing inventories rose 1.066 million barrel.

Distillate inventories were also down, by 1.90 million barrels for the week.

"We are entering into the single worst reset in energy prices in my lifetime", said one respondent.

It joined several other banks in slashing their oil price forecasts on account of the collapse of an output curb deal amongst members of the Organization of the Petroleum Exporting Countries and allies, or OPEC+, as well as the demand hit from the virus.

"This reminds me of the aftermath of the 1998 price crash and what it did to our productive capacity for the next decade", said John Kilduff, a partner at Again Capital Management in NY.

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