Oil prices fell 5% on Friday, and recorded a fifth-week loss due to the outweighing collapse of low demand caused by the coronavirus despite incentives from policy makers around the world.
Brent crude settled down $1.41, or 5.35% at $24.93 a barrel. The contract fell about 8% on the week. U.S. WTI crude settled down $1.09, or 4.82% at $21.51 a barrel. During the week, U.S. WTI crude fell more than 3%.
Both contracts fell by about two thirds this year, the coronavirus-induced collapse in economic activity and fuel demand led to a huge drop in investments by oil and other energy companies.
The fear is, if no more arms left to support the market? Will the industry be left alone by the beginning of next week? Will the products stored by physical crude oil traders turn into earnings? Or will they be the burning elements of the next wave of crisis? Who will benefit if the oil drops another ten dollars? Are calls of assistance from international Energy actors sufficient to stabilize the market? Will the leading actor, Saudi Arabia, return from the path of revenge started?
The group, consisting of 20 major economies on Thursday, pledged to inject more than $ 5 trillion into the global economy to alleviate business and income losses caused by the coronavirus.
Trump approved a $ 2.2 trillion coronavirus aid package on Saturday, which was recommended by the US House of Representatives for quick support, as the economy was shaken by increasing deaths.
China has restrained international flights with very strict measures due to 54 new imported cases. This means increasing the measure in travel restrictions to reduce the risk of travelers spreading the disease. Meaning that the demand for oil will drop further.
As the global demand for oil drops, Saudi Arabia has a hard time finding customers for its extra oil and continues to expand his production in order to get involved into markets dominated by others. The Saudis, whose economic instrument was not very much, also suffered a significant loss of tourism income due to travel restrictions, and there is a state of revenge war caused by desperation. At a time of demand disruption, it is debatable how it is beneficial to insist on increasing production restrictions.
However, Russia says that a new supply agreement may be possible in case the group of countries known as OPEC and its allies come together and support the idea.
The coronavirus outbreak reduced global oil demand by about 15 million to 20 million barrels (bpd) per day. The oil demand forecast for 2020 has declined significantly and an average drop of more than 7.4 million bpd is expected.