Oil prices gave back early gains to turn negative on Friday, even as the world’sÂ richest nations poured unprecedented aid into the global economy to stop aÂ coronavirus-driven recession and U.S. President Donald Trump hinted he mayÂ intervene in the price war between Saudi Arabia and Russia.
Both U.S. contracts gained more than Brent because of U.S. plans to buy upÂ to 30 million barrels of crude for its emergency stockpile by the end of JuneÂ and reports that regulators in Texas might curtail output.
“The outsized gains by WTI (U.S. crude) reflect the hope and not the realityÂ of the U.S. shale industry,” said Jeffrey Halley, senior market analyst atÂ OANDA.
“Once this reality finally sets in, I expect the rally in oil to disappearÂ as quickly as it began.”
As the spread of the coronavirus brings much of the world to a halt, nationsÂ have poured increasing stimulus into their economies while central banks haveÂ flooded markets with cheap dollars to ease funding strains.
“Positive risk sentiment and a weaker U.S. dollar are helping crude onÂ Friday. Also, comments from U.S. president Trump that he might get involved inÂ the oil (price) war at an appropriate time is supporting oil,” said UBS oilÂ analyst Giovanni Staunovo.
“My concern relates to the likelihood of more mobility restrictions aroundÂ the globe, which is likely to weigh further on oil demand. Hence, the worst isÂ probably not over for oil prices.”
U.S. crude and Brent have both collapsed about 40% in the past two weeksÂ since the breakdown of talks between the Organization of the Petroleum ExportingÂ Countries (OPEC) and its allies, including Russia, leading Saudi Arabia to rampÂ up supply.
Trump said on Thursday that he would act on the price war at the appropriateÂ time, saying low gasoline prices were good for U.S. consumers even though theyÂ are hurting the industry.Â
Despite the rise of oil prices on Thursday and Friday, Brent was still onÂ track for a weekly loss of more than 10%, its fourth consecutive weekly decline.Â
Supply restraint by core OPEC producers could push up second-quarter BrentÂ prices to $30 a barrel, while U.S. measures to support the market could underpinÂ prices in the near term, Goldman Sachs said in a research note.