Picture: 123RF/PAN DENIM
Picture: 123RF/PAN DENIM

Tokyo  — Oil prices rose on Friday as governments around the world pledged a huge injection of funds and other measures to limit the economic fallout from the coronavirus pandemic, despite fears the outbreak will destroy demand for oil.

Brent crude was up 22c, or 0.8%, at $26.56 a barrel by 4.15am GMT. US crude was up 42c, or 1.9%, at $23.02.

Both of the benchmarks are down nearly two-thirds this year and the slump in economic activity and fuel demand has forced retrenchment in investment by oil and other energy companies.

Oil requirements around the world may drop 20% as 3-billion people are in lockdown, the head of the International Energy Agency said as he called on major producers such as Saudi Arabia to help stabilise oil markets.

“It’s going to be a very uncertain year for us from a price point of view,” Peter Coleman, the head of Australian oil and gas developer Woodside Petroleum told investors on a conference call on Friday.

Leaders of the Group of 20 major economies pledged on Thursday to inject more than $5-trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic.”

The US has now passed China and Italy as the country with the most coronavirus cases, according to a Reuters tally, as the country faced a surge in hospital admissions and looming shortages in supplies, staff and sick beds.

“The US is the most consequential oil demand region in the world and real-time GPS data suggests an 82% drop in congestion in major US cities”, Capital Economics said in a note.

“Ultimately, US consumption has to lead the way for meaningful global oil demand recovery,” it said.

Still, the availability of funds helped oil prices gain as other markets rose while more governments roll out additional stimulus measures to combat the pandemic.

Reuters