By Peter Nurse    

Investing.com – Oil markets headed higher Thursday, rebounding after Wednesday’s hefty losses saw prices tumble to multi-year lows. But gains are likely only temporary as the measures introduced to combat the coronavirus pandemic are likely have a drastic impact on global demand.

AT 09:25 AM ET (1325 GMT), futures traded 10% higher at $22.92 a barrel, while the international benchmark contract rose 4.3% to $25.91.

Brent tumbled 13% on Wednesday, while U.S. crude oil lost nearly 25%.  

Helping oil prices push higher was Wednesday’s announcement of the European Central Bank’s €750 billion ($820 billion) programme to purchase securities to support European economies. 

This is the latest in a global effort by central banks to stave off a severe economic slowdown. 

However, a recession seems likely, with the coronavirus pandemic starting to disrupt the U.S. labor market. The number of Americans applying for initial unemployment benefits rose more than expected to 281,000 in the latest week, the largest increase since September 2017.

ABN Amro is the latest of the major banks to take a red pen to its forecasts of economic growth this year, with the Dutch bank now expecting a deeper economic contraction in the near term, but also a longer delay before a strong and durable rebound takes shape.

The bank expects the U.S.economy to contract by 6% in the first quarter of the year, and by 17% in the second quarter.

“With all kinds of measures being taken – including lock-downs, (partial) suspension of aviation, less commuting between work and home, etc – the impact on global oil demand will be huge,” ABN said, in a research note.

It expects a cut in demand of somewhere between 10%-15% during the second quarter of this year, the equivalent of 10-15 million barrels a day, followed by a modest recovery in the third quarter.

ABN sees oil prices around the $25 a barrel level out to June this year. Citigroup (NYSE:) goes further, seeing Brent averaging $30 a barrel this year and $17 through the second quarter. 

The U.S. Energy Information Administration (EIA) reported on Wednesday that crude inventories increased two million barrels for the week ended March 13.

Some relief for the oil markets could come from the United States buying crude oil for the Strategic Petroleum Reserve within the next two weeks, according to Bloomberg.

The move, which could total 77 million barrels of crude, aims to replenish the SPR by taking advantage of low oil prices while providing some much needed support for the local oil industry which has suffered a substantial blow by the latest oil price crash, especially in the shale patch.