U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are in a position to finish the week sharply lower despite stimulus efforts by policymakers around the world against demand destruction caused by the consequences from the rapid spread of the coronavirus. Both markets are down nearly two-thirds this year and sinking economic activity and fuel demand are expected to worsen as oil companies curtail investments in future activity.
Bearish news continued to dominate the trade this week although some investors saw potential benefits from a pledge by leaders of the Group of 20 major economies to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic.”
The G20 pledge comes on top of a U.S. $2 trillion economic stimulus bill aimed at mitigating the economic damage from the coronavirus outbreak, however, both moves may not be enough to drive up demand for crude oil based on Friday’s price action. Furthermore, a massive surge in unemployment claims indicates fewer employees will be driving to work, which could be a further drag on gasoline demand. On Thursday, the U.S. Labor Department reported that jobless benefit claims had soared to 3.28 million the week-ending March 20, easily eclipsing the previous record of 695,000.
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