Oil rebounds after ECB launches measures against Covid-19

SINGAPORE: Oil prices rebounded strongly Thursday a day after US crude hit its lowest level for 18 years, as the European Central Bank launched a bond-buying scheme to combat the coronavirus pandemic.

US benchmark West Texas Intermediate was up almost 17% at nearly US$24 a barrel, a day after plunging 24%.

International benchmark Brent crude was up 8.5% at US$27 a barrel, a day after slumping 14%.

Oil markets have been hammered due to collapsing demand as the virus prompts sweeping travel restrictions and business closures, and as major producers Saudi Arabia and Russia engage in a price war.

Thursday’s jump came as investors bought the commodity at bargain prices, and followed the ECB’s surprise announcement of a €750 billion scheme to purchase government and corporate bonds.

The so-called Pandemic Emergency Purchase Programme comes just six days after the ECB unveiled a stimulus package that failed to calm nervous markets, piling pressure on the bank to open the financial floodgates.

Analysts predict oil prices will remain at multi-year lows for some time, however.

“The continued containment and lockdown response of the world’s major economies in response to Covid-19 will advance to a sharp impact on oil demand,” said AxiCorp’s Stephen Innes.

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