Oil prices jump amid partial economic reopenings

Oil prices have increased in recent days while parts of the country begin to partially reopen their economies amid the coronavirus pandemic. 

A number of states already started allowing certain businesses to resume operations in an effort to boost the economy.

Analysts and some political figures are linking the partial oil price rebound to an increase in demand caused by the renewal of economic activity.

West Texas Intermediate (WTI) prices increased about 20 percent Tuesday, following several days of gains. That is a marked change from last month, when WTI prices were briefly negative, falling as low as negative $40 per barrel.

Patrick De Haan, head of petroleum analysis at GasBuddy, attributed the higher prices to an increase in demand and investor confidence.

“It’s both psychological improvement, and also that physical demand is starting to rally again,” he said. 

De Haan noted that GasBuddy’s data shows that demand on Monday was up 7.74 percent from the prior Monday and was the highest Monday demand since March 16. 

“There certainly is solid evidence that the worst demand destruction is behind us,” he said, noting that Texas and Florida, which have partially reopened, are among the country’s largest gasoline-consuming states. 

President Trump, meanwhile, celebrated the higher prices on Tuesday morning, tweeting, “Oil prices moving up nicely as demand begins again!” 

The Trump administration has pushed for states to lessen restrictions meant to prevent the spread of the coronavirus in order to boost the economy.

Some have expressed concern that reopening businesses could lead to a higher number of cases of the virus. 

De Haan said that if there is a new spike in cases, oil prices could backslide. 

“If we do see a second wave, that’s going to cause demand to go down,” he said. “If it does happen … that could certainly push prices back down.”

In recent months, prices have been impacted by the coronavirus and certain international disputes. In response, some have pushed for assistance for the industry. 

Meanwhile, changes to a new lending program could help the oil and gas industry by expanding qualification criteria. 

Environmentalists have opposed giving assistance to the oil industry, arguing that the government should not be helping polluting companies.