HOUSTON – (Realty News Report) – Oil prices climbed Tuesday morning, reversing some of the ugliness that occurred last month when oversupply and aggressive production increases by Saudi Arabia and Russia pushed domestic oil prices to record lows.
West Texas Intermediate crude soared about $24 a barrel Tuesday morning, a sharp increase above the lows of April when WTI dipped into negative territory,
“Oil prices have continued their surge, with WTI pushing (above $24) and providing further support for embattled oil stocks. This looks like an ongoing ‘reset’ in sentiment which ultimately leaves the general market outlook unchanged,” reported Chris Beauchamp, Chief Market Analyst at IG.
“Everyone was clearly too bearish down at $10 and lower, but with the price up almost three-fold from its April low the polar opposite risk now looms – storage constrains and oversupply problems have not disappeared, while demand is only set to recover modestly,” said Beauchamp.
The 19 percent gain Tuesday morning, still left prices far below the start of 2020 when the WTI was above $60 a barrel. But during the pandemic, driving (and oil consumption) was significantly reduced. A number of states have relaxing the insolation rules that shutdown thousands of businesses.
President Trump tweeted Tuesday: “Oil prices moving up nicely as demand begins again.”
Even with the rise to $24 a barrel, oil prices remain far below the $40-$50 a barrel that Texas oil producers need to break-even with a drilling venture.
But the WTI has recovered from the nightmare of late April when prices fell to negative levels.
West Texas Intermediate crude fell below $1 a barrel on April 20 to a low of a negative $37 a barrel, a 300 percent one-day decline the likes of which has never been seen before.
Weak oil prices are a threat to real estate in Houston, which is known as the Energy Capital of The World.. A forecast released by CoreLogic on Tuesday predicted that Houston home prices will decline 2.6 percent in 2020. Softness also developed in Houston’s commercial real estate.
May 5, 2020 Realty News Report Copyright 2020
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