Following a rally early on Friday supported by U.S. President Donald Trump suggesting he could intervene in the ongoing Saudi-Russia oil price war and by a flow of stimulus from governments to support their economies stricken by the coronavirus pandemic, oil prices resumed their slump on Friday.
At 8:23 a.m. EDT on Friday, WTI Crude was rising 2.97 percent at $26.62, and Brent Crude was up 3.40 percent on the day at $31.25. But by 11:00am, WTI had sank to $25.02, with Brent falling to $30.13.
Oil prices were set for a weekly drop of more than 10 percent for the fourth weekly decline in a row.
After a panic-driven bloodbath on the markets on Monday, Tuesday, and Wednesday, oil prices staged a relief rally on Thursday, which extended into Friday’s trading after President Trump said on Thursday that “at the appropriate time, I’ll get involved” in the Saudi Arabia-Russia oil price war.
While the U.S. consumer is “very much helped”, the lowest oil prices in years and the oil price war “hurts a great industry and a very powerful industry,” President Trump said, referring to U.S. shale.
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“So it’s very devastating to Russia. I would say it’s very bad for Saudi Arabia, but they were in a fight. They were in a fight on price. They were in a fight on output. And at the — at the appropriate time, I’ll get involved,” he added.
Meanwhile, the coronavirus pandemic is destroying oil demand in major economies in Europe and now in the United States as authorities encourage stay and work from home and discourage domestic travel, ranging from lockdowns in Italy, Spain, and France, to travel advisories elsewhere.
Amid this unprecedented oil demand shock, Saudi Arabia, the United Arab Emirates (UAE), and Russia promise to flood the market with oil to the tune of a combined 4 million bpd next month, when demand could be at its weakest as the pandemic is spreading. This week’s volatility and lowest prices in nearly two decades may not be the bottom, with some analysts saying oil prices in the teens are not far off. Paul Sankey, managing director at Mizuho Securities, said “Oil prices can go negative” in a note this week,