Oil prices rally on US stimulus package
US benchmark West Texas Intermediate rose 2.3 percent to trade at $23 a barrel.
SINGAPORE (AFP) - Oil prices rallied on Friday, tracking Wall Street gains after progress was made towards a $2 trillion rescue package to help the coronavirus-hit American economy.
US benchmark West Texas Intermediate rose 2.3 percent to trade at $23 a barrel, while international benchmark Brent crude gained two percent to nearly $27.
The Senate late Wednesday unanimously approved the stimulus package that provides funding to the under-pressure health care system, boosts unemployment payments as well as lending to small businesses that have been crippled by government-imposed shutdowns to control the spread of the coronavirus.
The House of Representatives is now expected to vote Friday on the measure.
The rise in oil prices echoed gains on Wall Street, as movement towards the rescue package eclipsed concerns about a record surge in US unemployment benefit claims.
Oil markets began plunging earlier this month after top exporter Saudi Arabia launched unilateral price cuts following a failure to secure an agreement with Russia to further reduce output and support prices.
Lockdowns and travel restrictions imposed by governments worldwide to fight the virus have added to downward pressure.
Riyadh faces pressure from Washington to row back on its decision, but the Kremlin said "the oil topic" was off the table in a G20 emergency video conference chaired by Saudi Arabia s King Salman on Thursday.
G20 nations pledged a "united front" in the fight against coronavirus, saying they were injecting $5 trillion into the global economy to counter the pandemic amid forecasts of a deep recession.
Industry consultant IHS Markit warned that current output levels cannot be sustained throughout the second quarter because oil storage capacity will fill up.
"Production is going to have to be reduced or even shut in. It is now a matter of where and by how much," said Jim Burkhard, vice president and head of oil markets at IHS Markit.
