Oil jumps 8% on stimulus hopes, spending cuts by U.S. producers - Reuters

Oil jumps 8% on stimulus hopes, spending cuts by U.S. producers - Reuters: Oil prices jumped over 8% on Tuesday, bouncing from the biggest rout in nearly 30 years a day earlier, as the possibility of economic stimulus encouraged buying and U.S. producers slashed spending in a move that could cut output.

On Monday, U.S. President Donald Trump pledged “major” steps to gird the U.S. economy against the impact of the spreading coronavirus outbreak. Japan’s government said it planned to spend more than $4 billion in a second package of steps to cope with the virus.

U.S. shale producers, including Occidental Petroleum Corp (OXY.N), deepened spending cuts that could reduce production.

“There was almost an immediate response from U.S. producers to cut spending that will likely result in diminished U.S. oil output in the months ahead,” said John Kilduff, partner at Again Capital LLC in New York, noting “The rapidity of that response helped buoy the market after Monday’s collapse.”

Oil plunged about 25% on Monday. It rebounded on Tuesday along with equities and other financial markets.

Brent futures LCOc1 rose $2.86, or 8.3%, to settle at $37.22 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 rose $3.23, or 10.4%, to settle at $34.36.

Technical traders called the session an “inside day” since neither benchmark touched the previous session’s high or lows, and said prices appeared to be consolidating in a new range.