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Oil price surges as Trump talks up potential Saudi-Russia truce
OIL prices jumped 8 per cent on Thursday after US President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their battle for market share but gains were capped by fears of a global recession due to the coronavirus.
Benchmark Brent, which rose as much as 11 per cent in early trade, was up 7.6 per cent at US$26.63 a barrel at 1330 GMT, while US crude rose 7.8 per cent at US$21.90.
Prices, which are still down 60 per cent from the start of the year, slipped from the day's highs as data from last week showed the number of Americans filing unemployment benefit claims shot to a record high for a second week, topping six million.
Mr Trump said he had spoken to the Russian and Saudi leaders and believed the two countries would strike a deal to lower production and support battered oil prices.
Mr Trump also said he had invited US oil executives to the White House to discuss ways to help the industry "ravaged" by slumping energy demand during the coronavirus outbreak.
Russian Energy Minister Alexander Novak said on Thursday that Moscow may return to oil negotiations with Saudi Arabia.
Speaking to Echo Moskvy radio station, Mr Novak also said that Russia would continue discussions with the US on oil markets.
"This is one of the options and we do not rule this out," he said when asked about the possibility of a resumption of talks with Saudi Arabia.
"Oil prices are seeing their biggest gains in two weeks this morning," Rystad head of oil markets Bjornar Tonhaugen wrote.
He added that US oil diplomacy and reports that China would speed up oil purchases were "not enough to save oil prices from further declines".
Russian President Vladimir Putin said on Wednesday that oil producers and consumers should find a solution that would improve the "challenging" situation of global oil markets.
A senior Gulf source said Saudi Arabia supported cooperation between oil producers to stabilise the market but blamed Russia's opposition to a proposal last month to deepen supply cuts for the market turmoil.
Moscow rejected a Riyadh-backed proposal for more supply cuts at a meeting of the Organization of the Petroleum Exporting Countries and other producers in Vienna in early March.
Kang Wu, head of Asia analytics at S&P Global Platts, said markets would be oversupplied by 15 million barrels per day in the second quarter, requiring major curbs in May and June to balance the market.
He said Brent needed to drop towards US$10 to force immediate action to curtail output.
US crude stockpiles rose 13.8 million barrels in their biggest weekly rise since 2016, and analysts expected stocks to keep rising as refineries curb output and gasoline demand falls.
"At the current price, many US oil exploring energy companies won't be able to make a profit and drilling activities might fall in North America," CMC Markets analyst Margaret Yang said. REUTERS