How the Oil Market Bounced Back From a Year of Crisis

How the Oil Market Bounced Back From a Year of Crisis

Oil prices have staged a rapid recovery since the biggest crisis to strike the energy industry in decades.

The Organization of the Petroleum Exporting Countries and its allies stepped in last spring to backstop the market by slashing production in the teeth of a collapse in crude prices. This week, the cartel is expected to reach a deal on unwinding some of those cuts.

Here is why U.S. crude prices have roared back above $60 a barrel from a low of minus $37.63 a barrel last April.

Investors Take a Back Seat

Traders and analysts say supply and demand, rather than speculation, have underpinned the rally so far. The ratio of positions held by money managers in WTI futures and options contracts who expect oil prices to rise, versus those who expect them to fall, is below levels seen during the last big run-up in oil prices in 2018. That suggests investors aren't in the driving seat.