Oil holds record gain in wild week as Trump wades into tussle

SYDNEY: Oil kept climbing after its biggest-ever single-day gain as US President Donald Trump waded into the price war between Saudi Arabia and Russia that has rocked crude markets amid slumping demand.

Futures in New York posted the biggest spike on record Thursday, rebounding from the lowest settlement since 2002.

Oil has been whipsawed this week as investors weigh further stimulus measures to combat the impact of the coronavirus pandemic against collapsing demand and an impending supply flood from the world’s biggest crude producers.

Trump said he was searching for “medium ground” to break the deadlock between the two oil superpowers as he faces calls from lawmakers to help the domestic oil industry.

The US also said it would kick off its commitment to fill its strategic reserves by buying 30 million barrels of American crude.

While oil has clawed back some losses many traders are bracing for the market rout to continue to below US$20 a barrel, according to a Bloomberg survey.

The price war is a “lose-lose strategy” for the Saudis and Russia, analysts at MUFG Bank Ltd said in a note, with the fiscal and revenue outlook for both countries challenging if crude holds below US$40 for a protracted period.

Saudi Arabia has ordered state-run Aramco to keep output at a record high of 12.3 million barrels a day over the coming months, but in a surprise move Thursday, both the kingdom and Iraq cut the rebates on freight costs they give to customers, effectively lifting prices.

West Texas Intermediate for April delivery, which expires Friday, rose 56 cents to US$25.78 a barrel on the New York Mercantile Exchange as of 7.54am in Singapore, trimming a fourth weekly loss.

The more-active May contract gained 1.6% to US$26.33.

Brent crude for May added 0.3% to US$28.55 on the ICE Futures Europe exchange after climbing 14% on Thursday.