- Brent, WTI bounce after three days of heavy losses.
- Gains likely to be limited, analysts say.
- Interactive graphic tracking global spread of coronavirus: open.
Oil prices rose nearly 10% on Thursday after aÂ three-day sell off drove them to their lowest levels in almost two decades asÂ demand plummeted due to the coronavirus and supplies surged in a fight forÂ market share between Russia and Saudi Arabia.
Benchmark Brent, which has lost half its value in less than two weeks, wasÂ offered some respite as investors across financial markets assessed the impactÂ of massive central bank stimulus.
Brent crudeÂ jumped $2.29, or 9.2%, at $27.16 a barrel by 0831 GMT,Â after plunging to $24.52 on Wednesday, its lowest level since 2003.Â
U.S. crudeÂ gained $3.20, or 15.7%, to $23.52 after dropping nearlyÂ 25% in the previous session to an 18-year low.Â
But analysts said gains were likely to be temporary, as tumbling demand dueÂ to the coronavirus outbreak was compounded by the collapse this month of a dealÂ on supply curbs between OPEC and other producers.
Saudi Arabia, the de facto leader of the Organization of the PetroleumÂ Exporting Countries, which kicked off a price war with Russia that sent pricesÂ into tailspin, is planning to keep pumping at a record rate of 12.3 millionÂ barrels per day (bpd) for months.Â
“From April 1, about 4 million bpd could flood the markets, potentiallyÂ pushing down crude oil prices into the teens,” Jefferies said in a note. “UnlessÂ somebody intervenes, no oil producer benefits from the current environment.”
U.S. senators on Wednesday upped the pressure on Saudi Arabia and Russia toÂ stop the price war and held talks with the kingdom’s envoy to Washington. TheyÂ urged President Donald Trump to impose an embargo on oil from the two countries.
Algeria’s energy minister said on Wednesday there were “positive signals”Â from China, the world’s biggest crude importer, in its efforts to control theÂ spread of the coronavirus.
But analysts have still been slashing growth forecasts for China, where theÂ disease erupted, to the lowest levels in decades.
Meanwhile, the spread of the virus elsewhere is showing no sign of abating,Â with governments resorting to lockdowns in a bid to contain the disease,Â hammering economies and raising prospects for a global recession.
Central banks have moved to mitigate the spiraling economic and financialÂ fallout from the epidemic, with the European Central Bank kicking off a 750Â billion euro ($820 billion) emergency bond purchase scheme after anÂ unscheduledÂ meeting on Wednesday.
“Monetary and fiscal stimulus will do little in returning energy demand back to normal but it will build confidence that the global economy will be in aÂ better position once it is behind the virus,” said Edward Moya, senior marketÂ analyst at OANDA in New York.