Oil prices appreciated on Friday after world leaders made firm promise of massive injection of funds to limit the economic fallout from the coronavirus pandemic, despite fears the outbreak will destroy demand for oil.
After tumbling for the past four weeks, Brent Crude was up 50 cents, or nearly 2 per cent at $26.84 a barrel and on track to end the week steady or only slightly lower, while the US crude was up 60 cents, or 2.7 per cent at $23.20, and is heading for a weekly gain of about 3 per cent.
Both contracts are down about 60 per cent so far this year.
Leaders of the Group of 20 major economies pledged on Thursday to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic.”
The United States has now passed China and Italy as the country with the most coronavirus cases, according to a Reuters tally, as the country faced a surge in hospitalizations and looming shortages in supplies, staff and sick beds.
“The U.S. is the most consequential oil demand region in the world and real-time GPS data suggests an 82 per cent drop in congestion in major U.S. cities”, Capital Economics said in a note.
“Ultimately, U.S. consumption has to lead the way for meaningful global oil demand recovery,” it said.
Still, the availability of funds helped oil prices gain as other markets rose while more governments roll out additional stimulus measures to combat the pandemic.
Meanwhile, the International Energy Agency, IEA, says global oil demand could drop as much as 20 million barrels per day or 20 per cent of total demand as 3 billion people are currently in a lockdown because of the Coronavirus outbreak.
Head of the agency, Fatih Birol told a conference call that the IEA, which coordinates energy policies of industrialised nations, would give a clearer outlook and timeframe in two weeks time