Oil prices rise as governments pledge support amid coronavirus chaos

Global demand is predicted to drop by 20 per cent with 3 billion people in lockdown

(FILES) In this file photo taken on October 21, 2019 A pumpjack from California-based energy company Signal Hill Petroleum is seen in front of the landmark Curley's Cafe, one of two pumpjacks in the Diner's parking lot which has been churning out oil from the ground below since 1921 in Signal Hill, California on October 21, 2019.  Despite the coronavirus pandemic that is devastating the world economy and oil demand, crude oil production continues at full steam, particularly in Saudi Arabia and the United States, pushing storage capacity to its limits.

Oil prices rose on Friday as governments around the world pledged a huge injection of funds and other measures to limit the economic fallout from the coronavirus pandemic, despite fears the outbreak will destroy demand for oil.

Brent crude was up 22 cents, or 0.8 per cent, at $26.56 a barrel, while US crude was up 42 cents, or 1.9 per cent, at $23.02 a barrel.

Both of the benchmarks are down nearly two-thirds this year and the slump in economic activity and fuel demand has forced massive retrenchment in investment by oil and other energy companies.

Oil requirements around the world may drop by 20 per cent as 3 billion people are in lockdown, the head of the International Energy Agency said as he called on major producers such as Saudi Arabia to help stabilise oil markets.

"It's going to be a very uncertain year for us from a price point of view," Peter Coleman, the head of Australian oil and gas developer Woodside Petroleum, told investors on a conference call on Friday.

Leaders of the G20 major economies pledged on Thursday 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."

The US has passed China and Italy as the country with the most coronavirus cases, as the country faced a surge in hospitalisations and looming shortages in supplies, staff and sick beds.

"The US is the most consequential oil demand region in the world and real-time GPS data suggests an 82 per cent drop in congestion in major US cities,” Capital Economics said in a note.

"Ultimately, US consumption has to lead the way for meaningful global oil demand recovery,” it said.

Still, the availability of funds helped oil prices gain as other markets rose while more governments roll out additional stimulus measures to combat the pandemic.