BackOil set for weekly gain on risk rally despite demand devastation
Futures in New York rose above $23 a barrel on Friday and are up around 4% this week after losing more than half of their value since mid-February.
Premium(Bloomberg) -- Oil was buoyed by a wider risk rally driven by monetary and fiscal responses to the coronavirus to head for its first weekly gain in five, despite a continued deterioration in demand.
Futures in New York rose above $23 a barrel on Friday and are up around 4% this week after losing more than half of their value since mid-February. Global stocks staged a partial recovery this week as central banks sought to cushion the blow from the virus, while the U.S. Senate passed a $2 trillion rescue package for the world’s largest economy.
Crude’s recovery looks fragile though, given the extent of demand loss and the deluge of new supply following the breakup of the OPEC+ alliance. The International Energy Agency warned that oil consumption could fall by as much as 20 million barrels a day, while industry consultant IHS Markit said the world will run out of places to store oil in as little as three months.
While the White House is urging Saudi Arabia to dial back its plan to flood the crude market, Goldman Sachs Group Inc. said any agreement between the kingdom, the U.S. and Russia would be insufficient in the face of the massive demand loss. Meanwhile, the Trump administration was forced to rescind an offer to buy from shale producers to top up emergency stockpiles after failing to win funding from Congress.
See also: Trump Didn’t Calm Oil Markets -- and Now It May Be Too Late
West Texas Intermediate for May delivery advanced 3.1% to $23.30 a barrel on the New York Mercantile Exchange as of 8:55 a.m. in Singapore after falling 7.7% on Thursday. The contract is up 3.9% this week, following a 58% collapse over the previous four weeks.
Brent crude for May added 2% to $26.87 a barrel on the ICE Futures Europe exchange following an 3.8% drop on Thursday. The global crude benchmark traded at a $3.57 premium to WTI.
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