Brent crude futures skyrocketed more than 80% in the second quarter as oil prices registered their best quarterly performance in 30 years. In the three months through to the end of June, crude oil prices bounced back and registered robust growth after falling to record lows in April.
Global benchmark Brent oil futures for September picked up 76 cents, or 1.8%, to $42.03 on ICE Futures Europe. Front-month contract prices fell by almost 38% in the first half of 2020, but was up nearly 81% in the second quarter of the year.
As global economic instability and political uncertainty continue to increase due to the coronavirus pandemic and worsening US-China feud, oil prices hit their international benchmark’s best quarterly performance since the third quarter of 1990, when they registered gains of 142% during the first Gulf War.
A US government report showed the largest weekly decline in domestic crude inventories so far this year with analysts polled by S&P Global Platts forecasting an average crude supply decline of 2.7 million barrels, while the American Petroleum Institute on Tuesday reported a fall of 8.2 million barrels.
The fall in US supplies has contributed to the optimism in crude markets, which have suffered some stagnation due to anxieties around fresh spikes of the virus and the impact of the contagion on crude demand. More than half of the US — including the states of New York, Florida and Texas — has reversed or halted reopening bars, restaurants and shops as the coronavirus pandemic rampages through almost every state and knocks the world’s largest economy.
However, despite notching extraordinary gains in recent weeks, analysts remain sceptical about brent crude futures retaining their bullish run. Oul price volatility is likely to continue over the coming months over “really high” dislocations throughout the global energy sector.
“I think obviously what we saw with the Covid crisis was unprecedented and, in oil markets, it was coupled with the dislocation of the supply agreement between Russia and the Opec countries at the same time,” Martin Fraenkel, president of S&P Global Platts, told CNBC’s “Squawk Box Europe” on Tuesday.
Earlier in April, benchmark US crude prices tumbled into negative territory for the first time on record, although brent crude futures did not follow.
The remainder of 2020 will see several important milestones that can potentially have an impact on oil prices.
“Looking ahead to the rest of the year, U.S. Presidential elections, a year-end Brexit deadline and the evolving Covid pandemic should provide the ingredients for a similarly dramatic sequel,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published on Wednesday.