Oil prices fell on Friday after rising 10 per cent in the session as the coronavirus epidemic knocked the outlook for demand and Moscow rejected an intervention by US President Donald Trump in Russia's price war with Saudi Arabia, reports agencies.
Brent crude futures were down 32 cents, or 1.1 per cent, at $28.15 a barrel by 1331 GMT. Brent is on track for a weekly loss of more than 16 per cent and its fourth consecutive weekly decline. US crude futures for April fell 72 cents, or 2.8 per cent, to $24.50. The front-month contract expires on Friday. The more active US crude contract for May was down 70 cents, or 2.7 per cent, at $25.21.
"The world is awash with oil... Simply put, oil is facing a prolonged period of demand destruction," said Stephen Brennock of oil broker PVM. Brent and US crude have both collapsed about 40 per cent in the past two weeks weighed by the spread of the virus and the collapse of coordinated output cuts by producers from the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia.
Trump said on Thursday that he would act on the price war at the appropriate time, saying low gasoline prices were good for US consumers even though they are hurting the industry. "At the appropriate time I'll get involved," Trump said.
"The low prices are threatening to hit the US shale oil industry hard, thereby jeopardising the US position as the world's largest oil producer," Commerzbank analyst Carsten Fritsch said.
However, the Kremlin on Friday said that Russia and Saudi Arabia have good relations when it comes to oil markets and Moscow does not need anyone else to intervene. Oil prices pared some of their gains after the Russian remarks. To counter the impact of the spreading virus, the world's richest nations are pouring unprecedented aid into the global economy to fend off a recession.
Sources told Reuters that China was set to unleash trillions of yuan of fiscal stimulus to revive an economy facing its first contraction in four decades. The announcements by central banks lifted oil prices by 10 per cent in the session, but crude futures turned negative as demand concerns persisted.
"My concern relates to the likelihood of more mobility restrictions around the globe, which is likely to weigh further on oil demand. Hence, the worst is probably not over for oil prices," said UBS oil analyst Giovanni Staunovo.
Supply restraint by core OPEC producers could push up second-quarter Brent prices to $30 a barrel, while US measures to support the market could underpin prices in the near term, Goldman Sachs said in a research note.