Oil prices rose on stock markets on Friday, March 27, 2020, after world leaders promised a massive injection of funds to limit the global economic fallout from the coronavirus pandemic, despite fears that the outbreak will destroy demand for oil.
Before oil prices rose, Brent crude was down 27 cents at $26.07 per barrel and U.S. crude was unchanged at $22.60 per barrel. Both of the benchmarks are down nearly two-thirds this year and the slump in economic activity and fuel demand has forced massive cutbacks in investment by oil and other energy companies.
After dipping for the past four weeks, Brent crude has now risen up by 50 cents, or nearly 2 percent, at $26.84 a barrel by 01:16 GMT, and on track to end the week steady or only slightly lower. While US crude has risen up by 60 cents, or 2.7 percent, at $23.20, and is heading for a weekly gain of about 3 percent.
However, both contracts are down about 60 percent so far this year.
“Oil requirements around the world may drop by 20% as 3 billion people are in lockdown”, the head of the International Energy Agency said as he called on major producers like Saudi Arabia to help stabilize 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, March 27, 2020.
How is G20 looking to help the oil industry and the global economy?
Meanwhile, leaders of the Group of 20 major economies, G20 pledged on Thursday, March 26,2020, to inject more than $5 trillion into the global economy to limit job and income losses and "do whatever it takes to overcome the pandemic." This will bring some relief to the declining global economy as it will as least stabilize it.
Meanwhile, the United States has now passed China and Italy as the country with the most coronavirus cases. The country is now facing a surge in hospitalizations and looming shortages in supplies, staff, and sick beds.
"The U.S. is the most consequential oil demand region in the world and real-time GPS data suggests an 82% drop in congestion in major U.S. cities", Capital Economics said in a note.
"Ultimately, U.S. consumption has to lead the way for meaningful global oil demand recovery," it said.
However, the availability of funds helped oil prices gain as other commodities such as gold experienced a fall in prices on the stock markets. More governments around the world are also rolling out additional stimulus measures to combat the economic effect of the pandemic.