It was cheery news in the global oil industry on Thursday as the price of international benchmark grade, Brent crude, climbed $4.40 or 17.8 per cent to $29.14 per barrel from less than $25 per barrel.
West Texas Intermediate crude futures also surged 24.67 per cent to settle at $25.32 per barrel, for its largest single-day percentage gain in history.
The prices rose on Thursday after President Donald Trump told CNBC that Saudi Arabia and Russia would ease pressure on oil, ending a price war that has contributed to crude’s massive plunge.
Trump said he spoke to President Putin and Saudi Crown Prince Thursday and expected them to announce an oil production cut of 10 million barrels and could be up to 10 million to 15 million barrels.
Trump later tweeted that a production cut would be “great for the oil & gas industry!” His comments came before a meeting with energy industry executives scheduled for today.
His tweet reads, “Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, and I expect and hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry.
“It will be very welcomed by the industry in the short run,” Dallas Fed President Robert Kaplan said on CNBC’s “Squawk on the Street.
“As long as the coronavirus continues, there’s just a substantial amount of excess capacity being generated every day … It will be particularly helpful as we come out of this virus and will speed the time hopefully where the supply-demand for oil can get back into balance.”
Oil production is typically discussed in terms of barrels per day but Trump made no reference to the time frame of the cuts. Additionally, it was not clear how the cuts would be distributed across oil-producing countries.