After steadying somewhat Thursday, world oil prices resumed their plunge Friday and dismissed the massive stimulus package announced by the European Union and President Donald Trump's hint he might intervene in the raging price war between Saudi Arabia and Russia.
Oil prices plummeted 11% Friday, completely erasing early gains Thursday that saw the benchmark Brent crude oil climbing briefly above $30 a barrel. Now, Brent crude futures fell $1.49 or 5.2%, to settle at $26.98 per barrel. U.S. crude futures for April fell $2.79, or 11.06%, to settle at $22.43 per barrel.
On Friday morning, WTI (U.S. crude) rose 2.97% to $26.62, while Brent Crude was up 3.40% on the day at $31.25. But by 11:00 a.m., WTI had sunk to $25.02, with Brent falling to $30.13. Thursday's price climb, however, was WTI's single best day on record but isn't receiving universal approval.
"The outsized gains by WTI reflect the hope and not the reality of the U.S. shale industry," said Jeffrey Halley, senior market analyst at OANDA. "Once this reality finally sets in, I expect the rally in oil to disappear as quickly as it began."
WTI and Brent both collapsed about 40% over the past two weeks since the breakdown of talks between the Organization of the Petroleum Exporting Countries (OPEC) and its 10 allies, including Russia. Saudi Arabia boosted production, and has kept boosting production, leading to the ruinous price was that now has some analysts speculating about $5 oil. The immediate result of the Saudi's price was, which it launched to punish Russia, was $20 oil.
Analysts affirm oil prices are set for a weekly drop of more than 10% for the fourth weekly decline in a row. Worse is to come. Amid this unprecedented oil demand destruction, Saudi Arabia, the United Arab Emirates (UAE), and Russia intend to flood the market with up to a combined 4 million bpd in April when demand will be at its weakest due to the fast spread of COVID-19 in the U.S.
"Positive risk sentiment and a weaker U.S. dollar are helping crude on Friday. Also, comments from U.S. President Trump that he might get involved in the oil (price) war at an appropriate time is supporting oil," said Giovanni Staunovo, UBS oil analyst.
"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."