Oil prices on Friday posted their biggest week of losses since the 2008 global financial crisis, rocked by the coronavirus outbreak and efforts by top exporter Saudi Arabia and its allies to flood the market with record levels of supply.
The rare combination of severe shocks to both supply and demand has caused the crude market to collapse as producers around the world steel themselves for an unexpected glut of oil in coming weeks.
“It’s a problem of an oil price war in the middle of a constricting market when the walls are closing in,” US energy historian Daniel Yergin said.
The coronavirus sparked panic selling across markets for the bulk of the week. The virus has infected at least 138,000 people worldwide and killed more than 5,000, disrupting business, markets and daily life.
Major oil producers were pumping more crude into the market as demand collapses.
Saudi Arabia has chartered more than 30 crude supertankers to export oil in coming weeks, specifically targeting big refiners of Russian oil in Europe and Asia, in an escalation of its fight with Moscow for market share.
Goldman Sachs said it now expected a record oil surplus of six million barrels per day by April, in a global market that usually consumes about 100 million bpd.
On Friday, prices were higher, rebounding after the United States and other nations signalled plans to support weakening economies.
But Brent crude dropped 25 per cent on the week, the biggest weekly fall since the 2008 global financial crisis.
On Friday, Brent rose 63 US cents to settle at $US 33.85 a barrel.
US West Texas Intermediate crude futures fell about 23 per cent on the week, their biggest percentage decline since 2008. WTI rose 23 US cents to settle at $US31.73 a barrel, after earlier gaining to $US33.87 a gallon.
Hopes for a US stimulus package that could ease an economic shock from the coronavirus provided some support to the oil and stock markets on Friday.