LONDON: Oil prices sank on Wednesday after the United States reported its biggest weekly build of crude oil inventories on record, while forecasts showed global demand crumbling to its worst levels in a quarter of a century.
Brent crude was down $1.88, or 6.4%, to $27.72 a barrel, while US West Texas Intermediate crude slid 24 cents, or 1.2%, to $19.87.
US crude stocks rose by 19 million barrels in the most recent week, the biggest one-week increase in history, to 503.6 million barrels as refiners slashed activity due to lost demand as a result of the coronavirus pandemic, the US Energy Information Administration said.
“Even though we knew it was going to be bad, it’s worse than people thought,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “We’re seeing the worst of demand destruction we’ve ever seen in our lifetime.” The International Energy Agency (IEA) on Wednesday forecast an oil demand dive of 29 million barrels per day (bpd) in April to levels not seen in 25 years and said no output cut could fully offset the near-term falls facing the market.
The Organization of the Petroleum Exporting Countries (OPEC), along with Russia and other producers - a grouping known as OPEC+ - has partnered with other oil-pumping nations, such as the United States, in the record global supply pact.
Officials and sources from OPEC+ states indicated the IEA, the energy watchdog for the world’s most industrialised nations, could announce purchases of oil for storage of up to several million barrels to buoy the deal. But as of Wednesday, no such IEA purchases had materialised.
Published in The Express Tribune, April 16th, 2020.
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