U.S. crude oil prices surged 24% Thursday to $25.22 a barrel.
Photo: angus mordant/ReutersU.S. oil prices rebounded from their lowest level in 18 years with their largest one-day percentage gain on record, extending a recent period of turbulent moves as a price war between Saudi Arabia and Russia ripples around the world.
U.S. crude rose 24% on Thursday to $25.22 a barrel, while Brent, the global gauge of prices, rose 14% to $28.47 a barrel.
Prices climbed early in the session after the U.S. Energy Department formally requested to buy up to 30 million barrels for the Strategic Petroleum Reserve in a bid to help soften the blow of low crude prices on U.S. producers.
Oil prices extended their gains after The Wall Street Journal reported Thursday that the U.S. was considering a diplomatic push to get the Saudis to cut oil production back to levels they had originally signaled. The Trump administration is also weighing possible sanctions against Russia.
Saudi Arabia and Russia have been locked in a price war that has sent crude prices plunging. Earlier this month, the kingdom tried to convince Russia to join its plan to support oil prices by cutting output through the end of the year. Russia refused, and the Saudis slashed prices and signaled they would boost output, sending oil prices crashing.
Even the president’s announcement last week that the U.S. would buy oil for the country’s Strategic Petroleum Reserve did little to prop up prices, which slipped below $30 on Monday.
That has pressured U.S. producers, who were already grappling with a well-supplied market and flagging demand. Many are cutting spending and output and some are even slashing dividends.
Despite Thursday’s gains, many say the outlook for oil prices remains bleak. Prices were already falling for much of 2020 due to lagging demand as the coronavirus shut down travel—first in and around China and then world-wide. Oil prices remain down about 60% in 2020.
Although there is some hope among traders that a U.S. intervention might help the Saudis and Russians reach a compromise, part of the day’s rise is also being driven by short sellers covering their bets, said Robert Yawger, director of the futures division at Mizuho Securities USA.
“The fundamentals are still very bearish,” said Mr. Yawger.
Write to Sarah Toy at sarah.toy@wsj.com
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