Oil set for weekly gain on risk rally despite demand devastation

Bloomberg) — Oil was buoyed by a wider risk rally driven by monetary and fiscal responses to the coronavirus to head for its first weekly gain in five, despite a continued deterioration in demand.

Futures in New York rose above $23 a barrel on Friday and are up around 4% this week after losing more than half of their value since mid-February. Global stocks staged a partial recovery this week as central banks sought to cushion the blow from the virus, while the U.S. Senate passed a $2 trillion rescue package for the world’s largest economy.

Crude’s recovery looks fragile though, given the extent of demand loss and the deluge of new supply following the breakup of the OPEC+ alliance. The International Energy Agency warned that oil consumption could fall by as much as 20 million barrels a day, while industry consultant IHS Markit said the world will run out of places to store oil in as little as three months.