By Adedapo Adesanya
The oil markets wrapped up its worst week in 12 years with a marginal recovery on Friday. During the week, the market witnessed crash in prices of the commodity and an expected increase in production.
The Brent fell in the week by over 24 percent, the biggest weekly loss for the commodity since the 2008 global financial crisis, while the WTI registered a 23 percent drop.
But on Friday night, the Brent crude futures gained 0.73 percent or 23 cents to trade at $35.44 per barrel, while its US West Texas Intermediate (WTI) crude counterpart registered a 24 cents or 0.68 percent growth to sell at $31.73 per barrel.
On Wednesday, President of the United States, Mr Donald Trump, banned foreign travels mostly from European countries into America and last night, he declared a national emergency for the coronavirus, which has nearly shutdown global economy.
The US President’s speech contained some pointers that boosted the confidence of a waning market, even by a little.
According to Mr Trump, the US government will buy large quantities of crude for the Strategic Petroleum Reserve, mentioning that this would save the taxpayer billions of dollars, while helping out the oil industry, and working towards the goal of energy independence.
Prices crashed on Monday by over 25 percent when Saudi Arabia placed discounts on all its crude grades, leading an already affected market into a more dangerous territory. This move was taken after a plan to cut oil production by 1.5 million barrels with Russia did not work.
The Kingdom, Russia, and the United Arab Emirates have also made intentions known that when the current deal of 1.7 million barrels per day cut made by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) expires on March 31, they will increase output as part of plans to capture their own market share.
Saudi Arabia is looking to increase its daily production to 13 million barrels per day, while the UAE national oil company, ADNOC, said it would raise crude supply to more than four million barrels per day in April and would accelerate plans to boost its capacity to five million barrels per day, a target it previously planned to achieve by 2030.
The extra oil the two Gulf allies plan to add is equivalent to 3.6 percent of global supplies and will pour into the market at a time when global fuel demand in 2020 is waning.
According to forecast by OPEC, global oil demand is expected to rise by 60,000 barrels per day in 2020 after it has slashed its forecasts by 920,000 barrels per day in February.
The International Energy Agency (IEA) also noted that oil demand was set to drop this year for the first time since the financial crisis due to the coronavirus outbreak and its impact on economies. The IEA now sees global oil demand falling by 90,000 barrels per day, in 2020.
