HOUSTON – (Realty News Report) – Oil prices climbed Tuesday morning, recovering some of the losses from last month when oversupply and increased production from Saudi Arabia and Russia drove domestic prices to historic lows.
West Texas Intermediate crude rose to about $24 a barrel Tuesday morning, a significant rebound from April’s extreme lows when WTI briefly traded in negative territory.
“Oil prices have continued their surge, with WTI pushing above $24 and providing further support for embattled energy stocks. This looks like an ongoing ‘reset’ in sentiment which ultimately leaves the general market outlook unchanged,” said Chris Beauchamp, Chief Market Analyst at IG.
“Everyone was clearly too bearish down at $10 and lower. With the price now nearly three times its April low, the opposite risk appears—storage constraints and oversupply remain unresolved while demand is likely to recover only gradually,” Beauchamp added.
The roughly 19 percent gain Tuesday morning still left prices well below where they stood at the start of 2020, when WTI traded above $60 per barrel. During the pandemic, driving and overall oil consumption fell sharply as states imposed restrictions that shuttered many businesses; some states have begun easing those restrictions.
President Trump tweeted Tuesday: “Oil prices moving up nicely as demand begins again.”
Even with the rebound to about $24 a barrel, oil remains well under the $40–$50 per barrel range many Texas producers need to break even on new drilling projects.
Still, WTI has recovered from the unprecedented collapse in late April, when futures briefly turned negative.
On April 20, West Texas Intermediate plunged below $1 per barrel, reaching a one-day low of negative $37—an unprecedented 300 percent swing that highlighted the extreme stress in storage and delivery markets.
Weak oil prices threaten Houston’s real estate market. Known as the Energy Capital of the World, Houston faces pressure across its housing and commercial sectors. A forecast released by CoreLogic on Tuesday projected that Houston home prices would decline 2.6 percent in 2020, and softness has also appeared in the city’s commercial property market.
May 5, 2020 Realty News Report Copyright 2020
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