Oil prices were set for their worst weekly drubbing since the 2008 financial crisis, despite eking out a 2% on Friday, as investors eyed evaporating demand from the coronavirus pandemic and a production ramp-up by top producers.
Brent crudeÂ was up 81 cents, or 2.4%, to trade at $34.03 per barrel after falling more than 7% on Thursday. For the week, Brent is set to fallÂ around 24%, the biggest weekly decline since December 2008, when it fell nearlyÂ 26%.
U.S. West Texas Intermediate crudeÂ rose 88 cents, or 2.8%, to trade at $32.40 per barrel after falling more than $1 earlier in the session. WTI isÂ set to drop nearly 21% this week, also the most since the height of theÂ financial crisis.
“It’s been a very rough week and so it’s not impossible people are locking in ahead of the weekend,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“I would also point out that in the context of the recent moves it’s not really a major move,” he added, noting that “volumes are terrible” and down significantly on average.
Just as travel bans, canceled events and other economic disruptions eat into crude demand, major oil producers are planning to add more crude to an oversupplied market.
A flood of low-priced oil from Saudi Arabia, the world’s largest exporter, and the United Arab Emirates is intensifying the pressure on prices after the collapse of a price supporting agreement with Russia last week.
“The surge in low-cost production is signicantly larger than expected with the collapse in demand due to the coronavirus looking increasingly broad,” said Goldman Sachs, which now expects what it said would be a record high oil surplus of 6 million bpd by April.
Russia, the world’s second-largest producer, does not appear willing to return to its agreement with the Organization of the Petroleum Exporting Countries (OPEC).
Domestic oil producers met with Russian Energy Minister Alexander Novak on Thursday but did not discuss returning to the deal, with the head of Gazprom Neft saying they plan to raise output in April.
“Both Russia and the Saudis are digging in deeper,” said Stratfor oil analyst Greg Priddy.
Elsewhere equities markets retraced earlier heavy losses after U.S. markets fell by the most since Black Monday in 1987 on Thursday after U.S. President Donald Trump announced a ban on travel to the United States from Europe.
U.S. energy historian Daniel Yergin said it may be some time before oil markets are relieved as the coronavirus courses through the world and disrupts daily life while Saudi Arabia and Russia try to flood the market.
However, the price slump may be doing the work needed to reduce supply. Energy companies in the U.S., the world biggest crude producer, are preparing to cut investment and drilling plans because of the plunging prices.