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Options trading Oil jumps 7% as investors see ‘light at the end of the tunnel’ with coronavirus lockdowns slowly lifting


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Options trading Oil jumps 7% as investors see ‘light at the end of the tunnel’ with coronavirus lockdowns slowly lifting

Kirk McKoy/Los Angeles Times via Getty Images Oil prices rose on Tuesday as traders looked optimistically at moves by several major economies to ease coronavirus lockdowns, allowing for greater economic activity and likely boosting demand for oil. West Texas Intermediate settled 20% higher, at $24.52 per barrel. “Many market participants believe there is light at…

Options trading Oil jumps 7% as investors see ‘light at the end of the tunnel’ with coronavirus lockdowns slowly lifting

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options trading Schlumberger oil pipeKirk McKoy/Los Angeles Times via Getty Images

  • Oil prices rose on Tuesday as traders looked optimistically at moves by several major economies to ease coronavirus lockdowns, allowing for greater economic activity and likely boosting demand for oil.
  • West Texas Intermediate settled 20% higher, at $24.52 per barrel.
  • “Many market participants believe there is light at the end of the tunnel,” the UBS analyst Giovanni Staunovo said.
  • Concerns persist, however, about future price movements, as storage issues remain for US oil.
  • Follow the price of oil live with Markets Insider.

Oil prices rose on Tuesday as traders looked optimistically at moves by several major economies to ease coronavirus lockdowns, allowing for greater economic activity and likely boosting demand for oil.

West Texas Intermediate settled 20% higher, at $24.52 per barrel. Brent crude, the international benchmark, climbed 14%, to $31.02 per barrel.

“Many market participants believe there is light at the end of the tunnel,” the UBS analyst Giovanni Staunovo said.

Naeem Aslam, the chief market analyst at Avatrade, said oil prices were rising “as the world returns to its new normal.”

Italy, France, and Spain are among the countries easing lockdown measures or setting dates to do so. They had faced some of the world’s most stringent restrictions since mid-March.

Several US states have also moved to ease lockdown measures, with nonessential businesses and beaches reopening in some parts of the country.

Read more: These 22 well-known companies have a rare opportunity to soon get acquired due to the coronavirus crisis, BTIG says

“All of this optimism has helped the oil prices to record the longest run of daily gains in more than nine months,” Aslam said. “This further strengthens the argument that the worst may be over for oil, and given the fact that the oil producers have started to curtail voluntary and involuntary supply cuts, the supply and demand curve may reverse its course.”

But Aslam added that the June contract for WTI was “still prone to risk” because both a supply glut and a lack of storage space for it persist.

Other analysts echoed the suggestion that the easing of lockdowns was supporting oil prices even though worries about storage continue.

Read more: Renowned strategist Tom Lee recommends 12 beaten-down travel stocks to buy now for an average profit of 32% during the pandemic recovery.

“While the inflection point appears near, we would describe the current environment as the darkest hour just before the dawn,” Staunovo said. “With oil inventories still increasing, crude oil prices remain vulnerable to renewed setbacks.”

Neil Wilson, the chief market analyst at Markets.com, said: “Oil continues to make steady gains with front month WTI to $22 on hopes lockdowns are being lifted. The idea that we will be moving around anything like as much as before is fanciful, at least in the near term.”

US oil prices turned negative for the first time in history two weeks ago because of the lack of storage options — particularly at a key storage facility in Cushing, Oklahoma — and the reduction in demand for the commodity.

Read more: When Wade Pfau isn’t writing books or winning awards, he’s teaching Ph.D. students the art of retirement income. Here are 4 ways he says investors can reduce risk and thrive financially in the long term.

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