Oil rebounds, but still heads for biggest weekly loss in years

SINGAPORE — Oil prices swung more than six per cent on Friday, but were still on track for their biggest weekly loss in more than a decade. 

In another day of volatile trading, both main contracts initially dipped more than two per cent, tracking heavy falls across global markets that have suffered some of their biggest losses in years.

But the commodity abruptly changed course in Asian afternoon trade, with West Texas Intermediate rising four per cent to $33 a barrel and Brent crude up 3.9 per cent at $34.50.

The much-needed rally came after the US military launched air strikes in crude-rich Iraq and stocks rebounded, with Asian bourses pulling back from early lows and European equities surging at the open.

Nevertheless, prices of US benchmark WTI were still down more than 20 per cent and on course for their biggest weekly drop since the global financial crisis of 2008.

Brent, the global benchmark, is down about a quarter for the week, Bloomberg News reported.

Crude markets were plunged into turmoil on Monday after top exporter Saudi Arabia sparked a price war with Russia over a row about slashing output.

That sent Brent and WTI through the floor, with both falling by a third.

The coronavirus outbreak added to downward pressure, as growing concerns about a global recession and travel restrictions — including a temporary ban on travel from Europe to the US — dimmed the outlook for demand.

"The scale of the oil price crash would have economists and analysts reevaluating their forecast for growth, and even increase the urgency among central bankers to cut interest rates," said Phillip Futures in a note.

Emergency measures by central banks on Thursday failed to douse concerns about the economic toll from the deadly disease, and markets suffered their worst day for decades.