Oil prices rose on Friday as governments around the world pledged a huge injection of funds and other measures to limit the economic fallout from the coronavirus pandemic, despite fears the outbreak will destroy demand for oil.
Brent crude was up 22 cents, or 0.8 per cent, at $26.56 a barrel by 0415 GMT. US crude was up 42 cents, or 1.9pc, at $23.02. Both of the benchmarks are down nearly two-thirds this year and the slump in economic activity and fuel demand has forced massive retrenchment in investment by oil and other energy companies.
Oil requirements around the world may drop by 20 per cent as 3 billion people are in lockdown, the head of the International Energy Agency said as he called on major producers like Saudi Arabia to help stabilise oil markets. “It is going to be a very uncertain year for us from a price point of view,” Peter Coleman, the head of Australian oil and gas developer Woodside Petroleum told investors on a conference call on Friday.
Leaders of the group of 20 major economies pledged on Thursday to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic.”
The United States has now passed China and Italy as the country with the most coronavirus cases as the country faced a surge in hospitalisations and looming shortages in supplies, staff and sick beds. “The US is the most consequential oil demand region in the world and real time GPS data suggests an 82pc drop in congestion in major US cities”, Capital Economics said in a note.
“Ultimately, US consumption has to lead the way for meaningful global oil demand recovery,” it said. Still, the availability of funds helped oil prices gain as other markets rose while more governments roll out additional stimulus measures to combat the pandemic.