Oil prices rallied after two straight days of decline as traders pinned hopes on a deal later this week between Saudi Arabia and Russia that would curb production and underpin the market.
Brent crude, the international oil benchmark, climbed 2.4 per cent to $32.63 a barrel in Asia trading on Wednesday. It fell more than 6 per cent over Monday and Tuesday combined, following a sharp rally at the end of last week.
G20 oil ministers are set to meet on Friday to try to find measures to support the global industry. Before that, Saudi Arabia and Russia are scheduled to meet on Thursday to address a feud over production that has flooded global markets with supply and halved the price of oil this year.
“We’re obviously set up for the next couple of days with very high expectations,” said Robert Rennie, global head of market strategy at Westpac.
The G20 meeting would be the first time ministers have specifically convened to address energy issues, underscoring the depth of unease about the oil crash.
On Friday, US President Donald Trump called on Russia and Saudi Arabia to reduce oil production by at least 10m barrels a day to put a floor under prices. Demand for crude oil has been hit hard as the coronavirus outbreak shuts down economic activity around the world.
“The market is very concerned about physical storage capacity, and even if we do see agreements within Opec, they may not be real agreements,” Mr Rennie said. “We need to see real production taken out of the market from a global point of view.”
The gains for oil came as a two-day rally in Asia equities ran out of steam, with most markets following Wall Street lower after a wave of optimism earlier in the week ebbed away.
Hong Kong’s Hang Seng index lost 1 per cent while China’s CSI 300 fell 0.5 per cent, though Japan’s Topix index eked out a 0.5 per cent gain.
Investors had pushed equities higher early in the week in response to signs the coronavirus pandemic was slowing across worst-affected countries, especially in Europe. But there are still questions over how quickly strict quarantine measures can be lifted, and concerns about the economic fallout.
The S&P 500 closed down 0.2 per cent overnight after relinquishing initial gains, while the Dow Jones Industrial Average and Nasdaq Composite each dropped by a similar amount.
The price of gold was 0.1 per cent up at $1,649.35 an ounce as uncertainty crept back into market, having touched its highest level in nearly a month on Tuesday.