- Brent, WTI heading for biggest weekly loss since 2008.
- Both contracts were down sharply earlier in the day.
Oil prices were set for their worst weeklyÂ drubbing since the 2008 financial crisis, despite rising over 3% on Friday, asÂ investors fretted over evaporating demand from the coronavirus pandemic and aÂ production ramp-up by top producers.
Brent crudeÂ was up $1.12, or 3.4%, at $34.33 a barrel by 0728 GMTÂ 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 (WTI) crudeÂ rose $1.17 cents, or 3.7%,Â to $32.66 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 lockingÂ in ahead of the weekend,” said Michael McCarthy, chief market strategist at CMCÂ Markets in Sydney.
“I would also point out that in the context of the recent moves it’s notÂ really a major move,” he added, noting that “volumes are terrible” and downÂ significantly on average.
Just as travel bans, cancelled events and other economic disruptions eatÂ into crude demand, major oil producers are planning to add more crude to anÂ 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 theÂ collapse of a price supporting agreement with Russia last week.Â
“The surge in low-cost production is significantly larger than expected withÂ the collapse in demand due to the coronavirus looking increasingly broad,” saidÂ Goldman Sachs, which now expects what it said would be a record high oil surplusÂ of 6 million bpd by April.
Russia, the world’s second-largest producer, does not appear willing toÂ return to its agreement with the Organization of the Petroleum ExportingÂ 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 GazpromÂ Neft saying they plan to raise output in April.Â
“Both Russia and the Saudis are digging in deeper,” said Stratfor oilÂ 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. PresidentÂ Donald Trump announced a ban on travel to the United States fromÂ Europe.
U.S. energy historian Daniel Yergin said it may be some time before oilÂ markets are relieved as the coronavirus courses through the world and disruptsÂ 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.Â
Energy companies in the U.S., the world biggest crude producer, are preparing toÂ cut investment and drilling plans because of the plunging prices.Â