The global benchmark crude, Brent, yesterday sank below $16 a barrel to its lowest since 1999, before recovering slightly to $21 on the prospect of extra pledges by producers to cut output in addition to a pact by major producers to limit supplies.
Brent touched $15.98 a barrel, but later rose by 8.4 per cent to $20.96 a barrel.
U.S. West Texas Intermediate (WTI) crude futures for June delivery rose $3.57, or 30.9 per cent, to $15.14 a barrel.
Since the start of the year, Brent has fallen more than 65 per cent, while WTI has dropped around 75 per cent.
Although the Organisation of Petroleum Exporting Countries (OPEC) was again tackling a supply glut, the drop in demand had been far less extreme than that triggered by the current restriction on movements worldwide to tackle the COVID-19.
OPEC and allied producers, referred to as OPEC+, agreed this month to reduce output by 9.7 million bpd, starting from May.
Additionally, producers are already considering further steps and this led to yesterday’s price recovery.
For instance, Saudi Arabia on Tuesday said it was ready to take extra measures with other producers.
Iraq made similar comments. The next formal OPEC+ meeting is in June.
The United States and other countries also said this month they would pump less.
But Reuters reported that in a development that raises doubt over a formal US supply cut, two of three Texas regulators on Tuesday delayed a vote to force producers to curtail output.