Oil back at $30 on hopes for virus stimulus

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(iStock)
(iStock)

Oil prices rebounded in Asian trade Wednesday from heavy losses, as major economies indicated they were ready to launch more stimulus measures to tackle the fallout from the coronavirus pandemic.

US benchmark West Texas Intermediate was up 0.5 percent at $27 a barrel, while international benchmark Brent rose 0.9 percent to $29 a barrel.

Prices are nevertheless still at multi-year lows, with travel restrictions and other measures aimed at combating the virus hitting demand and major producers Saudi Arabia and Russia locked in a price war.

They clawed back some ground on Wednesday, however, following heavy falls a day before, after US and European governments indicated they would unleash more stimulus measures.

The Trump administration is reportedly considering as much as $1 trillion in stimulus to boost the world's top economy, while Italy moved to re-nationalise ailing former national carrier Alitalia and France signalled it could nationalise firms.

But Stephen Innes, chief market strategist from AxiCorp, said that the demand outlook remained "dismal".

"Indeed, the scale of the economic impact of COVID-19 on the major world economies is unparalleled," he said.

The hopes for stimulus offset concerns about a new escalation of the Saudi-Russia standoff after Riyadh said Tuesday it plans to boost oil exports to more than 10 million barrels per day.

The world's biggest crude exporter said it would free up an additional 250,000 bpd of oil for exports by using gas for domestic consumption.

The price war began last week after OPEC kingpin Saudi Arabia pushed an informal alliance of major crude producers to slash output to combat the impact of the virus outbreak on prices.

But alliance partner and non-OPEC member Russia, the world's second-biggest oil producer, refused -- prompting Riyadh to drive through massive price cuts and pledge to boost production.

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