Global oil prices bounced from multi-decade lows Thursday, following the steepest single-day decline on record, but deeper travel restrictions, and new manufacturing sector shut-downs, point to even lower prices ahead.
Thursday rebounded was also supported by the U.S. Energy Department, which said it will buy 77 million barrels of oil to fill the nation's strategic petroleum reserve.
Still, Germany's Lufthansa said Thursday that Europe's largest airline has essentially no bookings at present, while carriers from Tokyo to Toronto are grounding fleets, slashing capacity and bracing for weeks, or even months, of international travel restrictions amid the coronavirus pandemic.
Meanwhile, Detroit's Big Three automakers said Wednesday they will shutter their North American facilities to protect their 150,000 employees from infection, and a key gauge of business sentiment in Germany, the Ifo index, fell to its lowest level since 2009.
"Jet fuel comprises around 8% of daily oil demand, and with more and more planes grinding to a halt, demand shock his here, and any meaningful recovery is going to be many months from now," Saxo Bank analyst Ole Hansen said on the bank's daily market podcast.
Brent crude futures contracts for May delivery, the global benchmark, were last seen $2.16 higher from their Wednesday close in New York and trading at $27.04 per barrel after hitting the lowest since November 2003 on Wednesday, a move that marks a 57% decline from its January 8 peak.
WTI contracts for April delivery, which are more tightly-linked to gasoline prices, were marked $3.8% higher at $24.17 per barrel, which is still around 65% lower from its early January top and near the lowest since April 2002.
Prices were also supported by reports that the U.S. could intervene in the ongoing price war between Saudi Arabia and Russia in order to prevent large-scale damage to the domestic oil and gas industry.
Saudi Arabia, the world's second-largest producer behind the United States, is set to pump a record 12.3 million barrels of crude each day, starting next month, following the collapse of its output limit agreement with OPEC cartel members and Russia earlier this month in Vienna.
Still, with the ongoing collapse in crude, Americans could see a significant decrease in gasoline prices. Consumer advocate GasBuddy is now forecasting June pump prices of around $2.03 per gallon, more than $1.70 lower than its prior forecast and the lowest in at least four years.
"There is a pre-coronavirus level for oil demand, and a post-coronavirus level of demand," GasBuddy said in a blogpost. "Demand for oil will be at multi-decade lows for a better part of 2020, which means gas prices will be some of the lowest we've experienced in a while."