Oil resumes surge as OPEC calls Monday meeting

Monitoring Desk

LONDON: Crude resumed its surge Friday with Saudi-led OPEC set to hold a video conference with non-cartel members, notably Russia, that could stop a price war that along with crushed demand because of the coronavirus has plunged the market into chaos.

Global stock markets, meanwhile, mostly fell Friday on news that the total number of COVID-19 infections had hit one million worldwide, while investors fretted over gloomy eurozone services data and awaited key US non-farm payrolls figures.

The dollar was higher against main rivals ahead of the key data.

OPEC’s move meanwhile sparked fresh speculation of an oil production cut, one day after US President Donald Trump sparked a record crude price rally by hinting that Russia and Saudi Arabia planned to end their price war with a sharp reduction in output.

In Friday trading, Brent North Sea oil leapt more than ten percent to $33.37 per barrel. West Texas Intermediate rallied more than five percent to $27.00.

On Thursday, Brent had hit an intra-day high of $36.29 per barrel, up almost 46 percent, and WTI soared around 35 percent to $27.39. “There’s certainly a lot of optimism that a deal is going to be done” on the price war, said OANDA analyst Craig Erlam told AFP.

According to a Russian source cited by the TASS agency, US officials have also been invited to take part in the meeting.

Prior to Thursday’s surge, oil prices had plunged this year as the market reeled from the effects of the new coronavirus pandemic, with WTI shedding around 65 percent of its value in the first quarter.

The market has crashed also owing to the price war, triggered last month by Saudi after Moscow refused to tighten oil supply to counteract the sharp drop in demand. Equities struggled after another thunderous rise in US jobless claims highlighted the economic devastation caused by the coronavirus.

As the number of people with COVID-19 tops a million and the death toll continues to climb, investors remain hostage to uncertainty as they try to gauge the long-term economic impact of the pandemic, which is widely expected to plunge the planet into recession.

“The short-term impact of the coronavirus tragedy is straightforward: a complete shutdown of businesses worldwide is taking a heavy toll on the global economy. “The coronavirus outbreak hits all layers of the population, has had an impact on each and every single business regardless of their size, and paralyzed each and every household regardless of their wealth,” Swissquote Bank analyst Ipek Ozkardeskaya told AFP.

“You do not need to be an economist or an expert to predict a meaningful recession knocking on the door.”

But with trillions of dollars pledged in government support, the wild volatility that characterised markets at the start of the crisis has given way to some form of stability.

Markets were choppy after data showed 6.7 million US workers applied for unemployment benefits last week, on top of the 3.3 million the week before as the coronavirus forced businesses nationwide to close their doors. (AFP/APP)