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Oil Set to Eke Out Weekly Gain on Risk Rally  | Rigzone

Oil Set to Eke Out Weekly Gain on Risk Rally  | Rigzone

(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 edged higher toward $23 a barrel on Friday and are up around 1% 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.

The U.S. is urging Saudi Arabia to dial back its plan to flood the crude market, but the window to pressure the kingdom and Russia may already have closed as demand evaporates at a record pace. Any agreement on supply between the three biggest producers will likely be too little and too late, according to Goldman Sachs Group Inc.

“The Saudi-Russia price war being called off is now totally irrelevant,” said Vandana Hari, founder of Vanda Insights in Singapore. “It’s now all about how the pandemic affects demand.”

West Texas Intermediate for May delivery advanced 0.6% to $22.73 a barrel on the New York Mercantile Exchange as of 7:29 a.m. in London after falling 7.7% on Thursday. The contract is up 1.3% this week, following a 58% collapse over the previous four weeks.

Brent crude for May fell 1% to $26.09 a barrel on the ICE Futures Europe exchange following an 3.8% drop on Thursday. The global crude benchmark traded at a $3.36 premium to WTI.

In another bad omen for oil prices, the U.S. Energy Department was forced to rescind an offer to buy from shale producers to top up emergency stockpiles after President Donald Trump failed to win funding from Congress. The purchases would have targeted small to mid-size producers that have borne the brunt of the recent market meltdown.

–With assistance from James Thornhill.

To contact the reporter on this story:

Ann Koh in Singapore at

To contact the editors responsible for this story:

Serene Cheong at

Andrew Janes, Ben Sharples

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