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Oil rises 2% but set for biggest weekly drop since 2008

Oil prices were set for their worst weekly drubbing since the 2008 financial crisis, despite eking out a 2% today, as investors eyed evaporating demand from the coronavirus pandemic and a production ramp-up by top producers. 

Brent crude was up 70 cents, or 2.1%, at $33.92 in early trade after falling more than 7% on Thursday. 

For the week, Brent is set to fall around 25%, the biggest weekly decline since December 2008, when it fell nearly 26%. 

US West Texas Intermediate (WTI) crude rose 80 cents, or 2.5%, to $32.30 after falling more than $1 earlier in the session. 

WTI is set to drop more than 22% this week, also the most since the height of the financial crisis. 

Just as travel bans, cancelled events and other economic disruptions eat into crude demand, major oil producers are planning to add more crude to an oversupplied market. 

A flood of low-priced oil from Saudi Arabia, the world’s largest exporter, and the United Arab Emirates is intensifying the pressure on prices after the collapse of a price supporting agreement with Russia last week. 

“The surge in low-cost production is significantly larger than expected with the collapse in demand due to the coronavirus looking increasingly broad,” said Goldman Sachs, which now expects what it said would be a record high oil surplus of 6 million bpd by April. 

Russia, the world’s second-largest producer, does not appear willing to return to its agreement with the Organization of the Petroleum Exporting Countries (OPEC). 

Domestic oil producers met with Russian Energy Minister Alexander Novak yesterday but did not discuss returning to the deal, with the head of Gazprom Neft saying they plan to raise output in April. 

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