SINGAPORE, March 16, 2020 (BSS/AFP) – Oil prices extended the gloom on
Monday after a Saudi-Russian price war and an equities meltdown sparked by
the coronavirus pandemic saw their biggest weekly losses in more than a
decade.
US benchmark West Texas Intermediate (WTI) briefly fell below $30 a barrel,
or 5.5 percent, in morning Asian trade before regaining its footing.
It was trading at $31.14 a barrel at around 0200 GMT, down nearly two
percent from Friday’s close.
The Brent global benchmark was down 2.9 percent at $32.82 a barrel.
Last week’s price war began after Saudi Arabia and other members of the
OPEC oil cartel pushed for an output cut to combat the impact of the virus
outbreak.
But Moscow, the world’s second-biggest oil producer, refused — prompting
Riyadh to drive through massive price cuts and pledge to boost production.
The COVID-19 outbreak added to downward pressure as it throttled global
equities, with growing concerns over a potential worldwide recession and
escalating travel restrictions prompting a crash in demand forecasts.
Prices made a feeble rally late last week after US President Donald Trump
announced $50 billion in Federal spending to stem the damage from the
coronavirus and plans to buy “large quantities of crude oil” to top up
strategic reserves.
But both benchmarks still fell by around 25 percent in the biggest weekly
drop since the global financial crisis in 2008, and more losses are expected.
“Rallies will likely continue to fade so long as the market continues to
weigh the double-whammy of the COVID-19… and the massive jump in supply,”
said Stephen Innes, global chief markets strategist at AxiCorp.