Global oil prices eased their rally this morning but remained on track for a huge weekly loss after unprecedented levels of volatility left producers and traders alike bruised.
Worldwide standard Brent crude rose 1.9 per cent this morning to stand at $21.73, while US benchmark West Texas Intermediate (WTI) gained nearly two per cent to reach $16.81.
However, after historic crashes earlier a few days ago, prices are headed for their eighth weekly fall in the last nine weeks.
In sum, Brent crude is on track to shed around 20 per cent of its value this week, whilst WTI is on track for a eight per cent fall.
Analysts stressed that despite the apparent stability of the last few days, the fundamental imbalance of supply and demand that is responsible for the market’s implosion is yet to be solved.
Jeffrey Halley of Oanda said the recent gains “in no way mitigate the size of the week’s sell-offs or the supply/demand imbalance globally that has brought us to this point”.
Naeem Aslam of Avatrade said it would be a surprise if oil prices did not fall again next week, as “nothing has changed in terms of supply and demand”.
The record production cuts agreed by oil cartel Opec and allies including Russia are due to kick from the beginning of May, but some producers are already beginning to cut supply independently.
Both Kuwait and Algeria have indicated that they would begin to cut output immediate, with other countries expected to follow suit.
In the US, producers received some much needed good news after Oklahoma’s oil regulator said firms forced to shut in production would not automatically lose their licenses.
Markets will be watching today’s oil rig figures from Baker Hughes with care, with the number of functioning rigs having dropped by 66 last week.
According to consultancy Rystad Energy, levels of activity in the US shale market are expected to decline as much as 80 per cent from their peak earlier this year.