Oil prices rallied today after a torrid day yesterday.
Brent crude was up to almost $28 a barrel and WTI crude futures is at $23, a four per cent rise on yesterday.
This has been attributed to pledge from the Federal Banking Reserve to dramatically increase support for US business, although the US Senate could not agree a rescue package.
To prevent the spread of the virus, travel bans have been imposed across the world.
“The Economist Intelligence Unit has revised down its forecast for Brent crude oil prices to an average of just over US$32/barrel in 2020.
“This is a significant downgrade from our previous forecast, of US$47/b, owing to a weaker than previously expected demand outlook amid a sharp slowdown in global economic activity,” EIU global economist Cailin Birch, said.
This has had an impact on the plans of major oil producers.
Chevron will cut oil production and Exxonmobil will reduce expenditure, though the latter’s rose 11 per cent.
No end in sight
The oil price has also been depressed by price war between Saudi Arabia and Russia.
Earlier this month, OPEC and Russia, a grouping known as OPEC+, were unable to agree a supply strategy going forward.
Saudi Arabia therefore decided to dramatically increase oil supply to guard its market share.
Brent crude prices fell to $25 a barrel yesterday, half the average amount reported in February.
These near record lows have however benefited consumers with some UK supermarkets reducing their prices.
As both coronavirus uncertainty and the price war continue, analysts have warned the price could fall further.