Oil prices rose on Friday this week, gaining further ground as some producers like Kuwait offered to cut output swiftly to try to counter the evaporation in global demand for fuels caused by the Coronavirus pandemic.
Brent crude was up 60 cents, or 2.8 per cent, at $21.93 having climbed 5 per cent on Thursday. US oil gained 66 cents, or 4 per cent, at $17.16 a barrel, after surging 20 per cent in the previous session.
But barring a sharper jump on the last trading day of the week, prices are heading for their eighth weekly loss in the last nine – one of the most tumultuous weeks in the history of oil trading, with US West Texas Intermediate falling into negative territory to minus $37.63 a barrel on Monday, while Brent crashed to a two-decade low.
“The disruption relating to the coronavirus is set to cause the steepest fall in global GDP since the Second World War,” Capital Economics said in a note, forecasting a 5.5 per cent contraction in global economies this year, dwarfing the 0.5 per cent fall seen during the global financial crisis.
“Once the virus is under control output should rebound, but it will take years to return to its pre-virus path,” it said.
Under a deal agreed between the Organization of Petroleum Exporting Counties, OPEC, and associated producers like Russia, a grouping known as OPEC+, production cuts equal to 9.7 million barrels of oil per day are due to kick in from May.
But Kuwait’s state news agency KUNA said on Thursday the producer will begin cutting supplies to international markets without waiting for the official start of the OPEC+ deal.
Meanwhile Azerbaijan’s Azeri-Chirag-Guneshli oil project will have to cut output sharply from May onwards as the oil producer fulfils its commitments under the deal to cut production.