U.S. President Donald Trump announced late on Wednesday that he expects the oil price war between Russia and Saudi Arabia to end within a “few days,” a move which, if possible, would reduce production and prop up oil prices. In a press conference, Trump said that he’d be meeting with oil producers over the weekend and said that “I think they’re going to make a deal.”
The statement sent oil futures returned optimism to an otherwise disheartened market and sent oil futures soaring higher during Thursday’s Asian trading session. U.S. WTI futures were up 9.6 percent as of 2:32 p.m. HK/SIN to trade at $22.16 per barrel, while Brent crude futures jumped 10.67 percent to $27.38 per barrel. BBC analysts also suggested that the price spike could be a result of expectations that U.S. shale producers will cut production.
The price spike is interesting because only a few days ago Saudi Arabia reiterated that it had no intention of giving in to pressure regarding its lower oil prices. And still, traders feel confident that Trump will once again get his way. Still, despite Saudi Arabia’s seeming stubbornness, the Wall Street Journal reports that the country’s biggest producer, Saudi Aramco, is already struggling to find storage for its increased supply. The company has already sent much of its inventory to Egypt, which is expected to be a holding area for the oil on its way to Europe. Decreased demand in Europe may keep those barrels locked up for some time.
The U.S. dollar weakened slightly against its primary trading partners on Thursday, with the U.S. dollar index down 0.25 percent in the mid-afternoon in Asia. The greenback edged up 0.05 percent against the yen to trade at 107.20, but it eased against the British pound, which gained 0.35 percent against the dollar to trade at $1.242. Despite modest declines, the dollar is expected to remain strong in the coming days as it is a favorite among traders during times of global crisis.
Traders are now eyeing the non-farm payroll data due out in the U.S. on Friday for additional clues about how the U.S. economy has been affected by the coronavirus.