INSUBCONTINENT EXCLUSIVE:
US crude tumbled 10.7 per cent on Friday and posted its biggest weekly decline since the 1991 Gulf War as the coronavirus epidemic dried up
global demand and as officials in Washington said an envoy would head to Saudi Arabia to deal with fallout of a Saudi-Russia oil price
war.
The week featured four days of massive selling as the growing pandemic kept people from driving and booking flights
Major forecasters like trading giant Vitol and energy researcher IHS Markit said oil demand could drop by as much as 10 per cent
Oil prices rose sharply on Thursday after days of selling, but the rally did not last.
US crude prices notched a weekly loss of 29 per cent
, the steepest since the outset of the US /Iraq Gulf War in 1991
Brent crude dropped by 20 per cent
Both benchmarks have dropped for four straight weeks.
"With the economy continuing to grind more and more to a halt, it's clear the demand
destruction is continuing to grow
Whatever efforts are being made to cut production in the US and capital expenditures, it's not enough right now," said John Kilduff, a
partner at Again Capital Management in New York.
On Friday, Brent crude futures fell $1.49, or 5.2 per cent , to settle at $26.98 a barrel
US crude futures for April fell $2.69, or 10.7 per cent , to settle at $22.53 a barrel
The front-month contract expires on Friday
The more active US crude contract for May settled down $3.28, or 12.7 per cent , at $22.63.
US crude has lost half its value in the past two
weeks, and Brent has dropped about 40 per cent , as the pandemic has cut demand at the same time as a collapse of coordinated output cuts by
the Organization of the Petroleum Exporting Countries (OPEC) and allied producers including Russia.
US officials scrambled to respond on
Friday, saying they would send a US Energy Department official to Saudi Arabia for several months to work on stabilizing energy markets
Also, a Texas state regulator spoke with OPEC Secretary General Mohammad Barkindo about the possibility of a global production cut.
Texas
regulators have not intervened to cut output among state producers since 1973
The American Petroleum Institute weighed in against the idea on Friday, saying quotas do not work.
"As far as a coordinated response with
OPEC, it's hard to see a plan coming together along those lines," Kilduff said.
Prices dropped sharply just before Friday's close, as
hedge funds and other money managers rushed to get out of the contract on its final day of trading, pushing the expiring April contract down
by twice as much as the current May contract, said Bob Yawger, director of Energy Futures for Mizuho.
Saudi Arabia said it would push its
production to a record 12.3 million bpd and booked shipments to send oil around the globe, refusing entreaties to rein in output
US elected officials have urged the Trump Administration to get involved.
Traders and analysts were scrambling to revise down forecasts for
oil demand, as government lockdowns to contain the coronavirus outbreak have rapidly cut fuel consumption.
"Global demand could easily drop
by 10 million barrels per day or more," said Giovanni Serio, head of research at Vitol
Others, including IHS Markit and Standard Chartered bank, have made similar predictions