* Brent and WTI post fifth consecutive weekly drop
* IEA says global oil demand could drop 20%
* Calls mount for new OPEC+ deal
* Interactive graphics on oil market: https://reut.rs/39ieums
(Updates with settlement prices)
By Jessica Resnick-Ault
NEW YORK, March 27 (Reuters) - Oil prices plunged 5% on
Friday and posted a fifth straight weekly loss as demand
destruction caused by the coronavirus outweighed stimulus
efforts by policymakers around the world.
Both contracts are down nearly two thirds this year and the
coronavirus-related slump in economic activity and fuel demand
has forced massive retrenchment in investment by oil and other
energy companies.
Brent crude LCOc1 settled down $1.41, or 5.35% at $24.93 a
barrel. The contract fell about 8% on the week. U.S. crude
Clc1 settled down $1.09, or 4.82% at $21.51 a barrel. During
the week, U.S. crude fell more than 3%.
"We ran out of ammunition to support the market," said Bob
Yawger, director of energy futures at Mizuho in New York. "The
government used up all their bullets this week - next week the
market is on its own."
Physical crude oil traders said they expect Permian basin
prices to slide by as much as another $10 a barrel by May, when
tanks in the region as well as across the country are seen
hitting maximum capacity. That would leave the price of a barrel
of oil pumped from the Permian - where nearly 5 million barrels
are extracted every day - in the single digits.
With 3 billion people in lockdown, global oil demand could
be cut by a fifth, International Energy Agency head Fatih Birol
said as he called on major producers such as Saudi Arabia to
help to stabilise oil markets.
The calls may not be enough to bring the market back into
balance.
"We have our doubts about whether Saudi Arabia will allow
itself to be persuaded so easily to return from the path of
revenge that it only recently embarked upon," said Commerzbank
analyst Eugen Weinberg, referring to the price war being waged
between Russia and Saudi Arabia.
The Group of 20 major economies on Thursday pledged to
inject more than $5 trillion into the global economy to limit
job and income losses from the coronavirus and "do whatever it
takes to overcome the pandemic". Leaders of the U.S. House of Representatives are determined
to pass a $2.2 trillion coronavirus relief bill by Saturday at
the latest, hoping to provide quick help as deaths mount and the
economy reels. Mainland China reported its first locally transmitted
coronavirus case in three days and 54 new imported cases as
Beijing ordered airlines to implement sharp reductions in
international flights, for fear travellers could reignite the
outbreak.
As global oil demand plummets, Saudi Arabia is struggling to
find customers for its extra oil, undermining its bid to seize
market share by expanding production. The Organization of the Petroleum Exporting Countries (OPEC)
and its de facto leader Saudi Arabia this month failed to reach
agreement with other producers, including Russia, to curb oil
production to support prices.
But the head of Russia's sovereign wealth fund, Kirill
Dmitriev, told Reuters a new supply pact between OPEC and its
allies, a group known as OPEC+, might be possible if other
countries join. "It does not seem as though there is anything the Saudis or
the broader OPEC+ group can do to push the market significantly
higher," said ING analyst Warren Patterson.
"The demand destruction we are seeing does mean the level of
(production) cuts that would be needed by the group would be
just too much to stomach," he said.
Russian Deputy Energy Minister Pavel Sorokin said the
coronavirus outbreak has dented global oil demand by 15 million
to 20 million barrels per day (bpd).
Oil and gas research group JBC Energy said it had
"drastically" reduced its oil demand forecast for 2020,
expecting a decline of more than 7.4 million bpd on average.
Global oil demand stood at about 100 million barrels per day
last year, according to the U.S. Energy Information
Administration.
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Oil price dive turns up the heat on OPEC finances png https://tmsnrt.rs/2IulvWo
Goldman Sachs on oil demand destruction https://tmsnrt.rs/3bc3Z5L
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(Additional Reporting by Bozorgmehr Sharafedin in London and
Aaron Sheldrick and Sonali Paul in Tokyo; Editing by Jane
Merriman, David Goodman, David Gregorio and Daniel Wallis)