The oil price continues to surge higher in today’s trading session on Tuesday, racking up a 5th straight day of gains as the market braced for further production cuts and expectations there will be a pick up in demand as countries reopen for business after the devastating effects caused by the coronavirus that has devastated world financial markets.
After dropping into negative territory just a few weeks ago on concerns of oversupply which was so rampant it lead to a lack of places to store oil, the price has rebounded dramatically and it seems for the time being, the price may continue to grind higher
“As more economies start to reopen, crude oil finds itself in the opposite situation of where it has been, as the forces which drive the price collapse—falling demand and a failure to cut production—start to reverse into a situation of potentially recovering demand and falling production,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
Analysts at one of the world’s biggest investment banks believe the rally in oil is set to continue and predict the price will break the $50 mark this year as countries such as China and the US get back to business which will once again generate demand for the black gold.
"Oil production has started to decline quickly from a combination of scaleback in activity, shut-ins and core-OPEC/Russia production cuts. Demand is also beginning to recover from a low base, led by a restarting Chinese economy and transportation demand in developed market economies," said analysts from Goldman Sachs.
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