Oil plunges, posts fifth straight weekly loss

NEW YORK — Oil prices plunged 5% on Friday and posted a fifth straight weekly loss as demand destruction caused by the coronavirus outweighed stimulus efforts by policy makers around the world.

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

Brent crude settled down $1.41 or 5.35% at $24.93 a barrel. The contract fell about 8% on the week. US crude settled down $1.09 or 4.82% at $21.51 a barrel. During the week, US crude fell more than 3%.

“We ran out of ammunition to support the market,” said Bob Yawger, director of energy futures at Mizuho in New York. “The government used up all their bullets this week — next week the market is on its own.”

Physical crude oil traders said they expect Permian basin prices to slide by as much as another $10 a barrel by May, when tanks in the region as well as across the country are seen hitting maximum capacity. That would leave the price of a barrel of oil pumped from the Permian — where nearly 5 million barrels are extracted every day — in the single digits.

With 3 billion people in lockdown, global oil demand could be cut by a fifth, International Energy Agency head Fatih Birol said as he called on major producers such as Saudi Arabia to help to stabilize oil markets. The calls may not be enough to bring the market back into balance.

“We have our doubts about whether Saudi Arabia will allow itself to be persuaded so easily to return from the path of revenge that it only recently embarked upon,” said Commerzbank analyst Eugen Weinberg, referring to the price war being waged between Russia and Saudi Arabia.

The Group of 20 major economies on Thursday pledged 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”.

Leaders of the US House of Representatives are determined to pass a $2.2 trillion coronavirus relief bill by Saturday at the latest, hoping to provide quick help as deaths mount and the economy reels. —