Oil prices fell sharply on Friday, putting US crude on track for its biggest weekly percentage decline since 1991, as the spread of coronavirus slashed demand, while Moscow rejected US intervention in a price war with Saudi Arabia.
The selloff followed a market rebound on Thursday, when U.S. crude posted its largest one-day gain in history.
US crude has lost half its value in the past two weeks, and Brent has dropped about 45%, as the oil market has contended with the pandemic cutting demand at the same time as a collapse of coordinated output cuts by producers from the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia.
On Friday, Brent crude futures were down $1.30, or 4.5%, to $27.16 a barrel by 11:48 a.m. EDT (1548 GMT). Brent was on track for a weekly loss of around 20% and its fourth consecutive weekly decline.
US crude futures for April fell $2.83, or 11%, to $22.39 a barrel. The front-month contract expires on Friday. The more active U.S. crude contract for May was down $2.27, or 8.7%, at $23.65.
WTI was on track for a weekly loss of 26%, the steepest drop since 1991.
Traders and analysts were scrambling to revise down forecasts for oil demand, as government lockdowns to contain the coronavirus outbreak have rapidly cut fuel consumption. Vitol, the world's largest oil trader, said Friday that global demand could fall by 10% or more.
"Global demand could easily drop by 10 million barrels per day or more," said Giovanni Serio, head of research at Vitol. Others, including IHS Markit and Standard Chartered bank, have made similar predictions.
To counter the effect of the spreading virus, the world's richest nations are pouring unprecedented aid into the global economy to fend off a recession.
Sources told Reuters that China was set to unleash trillions of yuan of fiscal stimulus to revive an economy facing its first contraction in four decades.
Saudi Arabia said it would push its production to a record 12.3 million bpd and booked shipments to send oil around the globe, refusing entreaties so far to rein in its output. U.S. elected officials have urged the Trump Administration to get involved, and Texas regulators have been approached about reducing production in that state for the first time in decades.
US oil production has surged to nearly 13 million bpd, mostly as a result of shale production, but those companies have struggled to generate returns for investors. Numerous players are cutting spending drastically.
"The low prices are threatening to hit the U.S. shale oil industry hard, thereby jeopardizing the U.S. position as the world's largest oil producer," Commerzbank analyst Carsten Fritsch said.
U.S. President Donald Trump said on Thursday that he would act on the price war at the appropriate time, though he said low gasoline prices were good for U.S. consumers even though they are hurting the industry.
However, the Kremlin on Friday said that Russia and Saudi Arabia have good relations when it comes to oil markets and Moscow does not need anyone else to intervene.
Supply restraint by core OPEC producers could push up second-quarter Brent prices to $30 a barrel, while U.S. measures to support the market could underpin prices in the near term, Goldman Sachs said in a research note.