The U.S. benchmark approached $30 a barrel, a month after briefly falling below zero, but it’s still far from where it was before the pandemic.
Workers at a drilling rig in Texas in April. Even after the recent rally, oil prices are roughly half of what they were at the beginning of the year. Driving in the United States and Europe is picking up a little. Refineries in China are buying more oil as that country’s economy reopens. Saudi Arabia and Russia ended their price war and slashed production, and American oil companies are decommissioning rigs and shutting wells.
All those developments have helped push up oil prices modestly in recent weeks. On Friday, U.S. oil futures climbed more than 7 percent to nearly $30 a barrel, which is just enough for some of the best oil wells in the United States to break even.
That may seem like a minor miracle given that the price is more than $60 above where it was about a month ago. On April 20, the U.S. oil futures contract fell below zero for the first time as some traders paid buyers to take oil off their hands.
“May, it seems, is a month when traders can finally sit back more comfortably for a moment and take a breath,” said Bjornar Tonhaugen, head of oil market research at Rystad Energy, a research and consulting firm. “But we warn that the second half of the year will not be met with precrisis oil prices again, as the gigantic oil stock overhang must first be worked down.”
Last updated on Sun., May 17, 2020.