Oil prices rose sharply this morning as traders absorbed the possibility that the European Central Bank will take actions to bolster the economy.
The price of West Texas Intermediate crude oil, the U.S. benchmark, swung to a 4.8% gain to $30.95 per barrel as of 8 a.m. The price of Brent crude, the global benchmark, got a 5.8% jolt, rising to $30.94. The price for crude climbed further throughout this morning and was at $31.39 as of 9:45 a.m. WTI was up to $32.20.
As USA Today reports, the jump began after European Central Bank President Mario Draghi suggested at a press conference that the organization may seek to jumpstart the economy with another round of quantitative easing this year.
The rally in oil prices came after the price of WTI briefly tumbled below $27 a barrel earlier this week, touching lows not seen since 2003, according to the Oil Price Information Service.
Despite the gains in oil prices this morning, the fundamental outlook remains unchanged for oil supply. The Organization of the Petroleum Exporting Countries and U.S. producers have maintained high rates of oil production despite a global glut that has crashed prices.
Even as prices rose, Moody’s Investor Service analysts placed the credit ratings of 120 oil and gas companies worldwide on review for downgrade, signaling the deepening financial troubles for a sector that could face many bankruptcies in 2016.
“Oil prices have deteriorated substantially in the past few weeks and have reached nominal price lows not seen in more than a decade,” Moody’s analysts say in a report. “Moody’s has adjusted its view downward for the likely range of prices. We see a substantial risk that prices may recover much more slowly over the medium term than many companies expect, as well as a risk that prices might fall further.”
