Oil prices fell on Friday as demand destruction caused by the coronavirus outweighed stimulus efforts by policymakers around the world and the United States faced the prospect of becoming the next global epicenter of the pandemic.
U.S. crude was down $1.48, or 6.5%, at $21.66.
Brent crude was down $2.16, or 8%, at $24.75 a barrel.
Both contracts were on track for a fifth consecutive weekly drop. They are down nearly two thirds this year and the coronavirus-related slump in economic activity and fuel demand has forced massive retrenchment in investment by oil and other energy companies.
“Unlike the financial markets, the oil market is apparently finding it difficult to look beyond the current crisis,” said Commerzbank analyst Eugen Weinberg.
With 3 billion people in lockdown, global oil requirements could drop by 20%, International Energy Agency head Fatih Birol said as he called on major producers such as Saudi Arabia to help to stabilize oil markets.
Analyst Weinberg, however, is not hopeful of such calls receiving the desired response.
“We have our doubts about whether Saudi Arabia will allow itself to be persuaded so easily to return from the path of revenge that it only recently embarked upon,” he said, referring to the price war being waged between Russia and Saudi Arabia.
The Group of 20 major economies on Thursday pledged to inject more than $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic”.
Leaders of the U.S. House of Representatives are determined to pass a $2.2 trillion coronavirus relief bill on Friday, or on Saturday at the very latest, hoping to provide the quickest help possible as deaths mount and the economy reels.
The United States has so far reported 84,946 infections and 1,259 deaths from the virus.
Mainland China reported its first locally transmitted coronavirus case in three days and 54 new imported cases as Beijing ordered airlines to implement sharp reductions in international flights, for fear travelers could reignite the outbreak.
As global oil demand plummets, Saudi Arabia is struggling to find customers for its extra oil, undermining its bid to seize market share from rivals by expanding production.
The Organization of the Petroleum Exporting Countries (OPEC) and its de facto leader Saudi Arabia this month failed to reach agreement with other producers, including Russia, to curb oil production to support prices.
But the head of Russia’s sovereign wealth fund, Kirill Dmitriev, told Reuters that a new supply pact between OPEC and its allies, a group known as OPEC+, might be possible if other countries join in.
“It does not seem as though there is anything the Saudis or the broader OPEC+ group can do to push the market significantly higher,” said ING analyst Warren Patterson.
“The demand destruction we are seeing does mean the level of (production) cuts that would be needed by the group would be just too much to stomach,” he said.
Algerian oil minister called for an extraordinary meeting of OPEC’s economic panel via teleconference to assess oil market conditions and immediate prospects.
Oil and gas research group JBC Energy said it had “drastically” reduced its oil demand forecast for 2020, expecting a decline of more than 7.4 million barrels per day on average.