Due to the plunge in demand delivered by the coronavirus outbreak, OPEC lowered its global oil demand forecast. Consequently, oil prices slid with US crude on track for its lowest close since 2002.
After reports of weak demand and forecasts for growing supply, oil has been under pressure all week. Global demand in 2020 will contract by 6.9 million bpd (6.9 percent), according to the OPEC’s latest monthly report.
While US WTI crude CLc1 slumped 18 cents (0.9 percent) to $19.68, Brent LCOc1 futures plunged 33 cents (1.2 percent) to $27.37 a barrel, putting US futures on track to settle at its lowest since January 2002.
For May-June, output cuts by 9.7 million bpd agreed by OPEC+. Output cuts of another 10 million bpd expected by the group from the US and other countries. Some analysts, however, have said it is unlikely to materialise in full. At current prices, much of production in the US is unprofitable.
Following the OPEC+ deal, three company sources and two traders said on Thursday that Russian energy firms have already significantly reduced oil export plans for May. Some nations have committed to boosting oil purchases for their strategic stockpiles. Nevertheless, there are limits to the extent of global coordination and how much oil can be bought.
