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Oil prices resume losses as morning rally loses legs

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AFP – Oil prices fell yesterday, as concerns about the rapidly spreading coronavirus pandemic and an escalating price war eclipsed pledges by major economies to launch stimulus measures.

Both main contracts initially opened higher in Asian trade but slipped into the red in the afternoon, tracking falls on most bourses in the region.

US benchmark West Texas Intermediate was down 2.5 percent at $26 a barrel, while international benchmark Brent lost 1.5 percent to $28.

Crude has slumped close to 17-year lows in recent days, with travel restrictions and other measures aimed at combating the virus hitting demand and major producers Saudi Arabia and Russia locked in a price war.

Both main contracts suffered fresh selling after Riyadh said it plans to boost exports to more than 10 million barrels per day.

The world’s biggest exporter said it would free up an additional 250,000 bpd of oil for exports by using gas for domestic consumption.

The commodity had enjoyed an early advance Wednesday after US and European governments indicated they will unleash more stimulus measures, with the United States flagging a package of more than $1 trillion.

“The ongoing producer price war, and the exponential increase in countries closing borders, crushed any rebound hopes,” said Jeffrey Halley, senior market analyst from OANDA.

The price war began last week after OPEC kingpin Saudi Arabia pushed an informal alliance of major crude producers to slash output to combat the impact on prices from the virus outbreak.

But alliance partner and non-OPEC member Russia, the world’s second-biggest oil producer, refused prompting Riyadh to drive through massive price cuts and pledge to boost output.

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