International Oil Prices Surge on COVID-19 Treatment Hopes... WTI Up 22%

[Image source=Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] International oil prices surged on expectations for the development of a treatment for the novel coronavirus disease (COVID-19). The optimism that the acceleration of treatment development could lead to a faster economic reopening is analyzed as the driving force behind the sharp rise.

On the 29th (local time) at the New York Mercantile Exchange (NYMEX), June West Texas Intermediate (WTI) crude oil closed at $15.06 per barrel, up $2.72 (22%). At the London ICE Futures Exchange, June delivery of Brent crude oil from the UK North Sea was trading at $22.54 per barrel, up $2.08 (10.2%).

The surge on this day is attributed to expectations for a COVID-19 treatment. Foreign media such as CNBC reported that after pharmaceutical company Gilead Sciences announced positive results from clinical trials of the COVID-19 treatment Remdesivir, optimism spread that economic activities could resume earlier than expected.

The fact that U.S. crude oil inventories did not increase as much as expected was also seen as a positive factor. The U.S. Energy Information Administration (EIA) reported that crude oil inventories increased by 9 million barrels last week, which is less than the market's initial expected increase of 11.7 million barrels. Last week, U.S. crude oil production was 12.1 million barrels, down about 1 million barrels compared to mid-last month’s 13.1 million barrels.

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