Oil prices swung more than six percent Friday but were still on track for their biggest weekly loss in more than a decade owing to a price war and the spreading coronavirus pandemic.
In another day of volatile trading, both main contracts initially dipped more than two percent, 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 percent to $33 a barrel and Brent crude up 3.9 percent at $34.50.
The much-needed rally came after the US military launched airstrikes 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 are still down more than 20 percent this week 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 Monday after top exporter Saudi Arabia sparked a price war with Russia over a row about slashing output to support the virus-battered energy sector.
That sent Brent and WTI through the floor, with both falling by a third.
The virus 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 re-evaluating 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 Thursday failed to douse concerns about the economic toll from the deadly disease, and markets suffered their worst day for decades.
The price war started after Saudi Arabia and other OPEC members pushed for an output cut to combat the impact of the virus outbreak.
But Moscow, the world’s second-biggest oil producer, refused – prompting Riyadh to drive through massive price cuts and pledge to boost production.