NEW YORK: Oil prices were mixed with Brent down and US crude higher after Organization of the Petroleum Exporting Countries (OPEC) lowered its global oil demand forecast due to the “historic shock” delivered by the coronavirus outbreak.
Before the OPEC released its latest forecast, global benchmark Brent futures were up over $1 a barrel as investors hoped record builds in US inventories would prompt producers there to cut output quickly. Brent futures fell 20 cents, or 0.7%, to $27.49 a barrel, while West Texas Intermediate crude (WTI) rose 30 cents, or 1.5%, to $20.17.
WTI rebounded after the US benchmark settled on Wednesday at its lowest since February 2002 after government data showed US crude stocks registering a record build for a second week in a row, rising by 9.2 million barrels last week. OPEC said in a monthly report it now expects global demand to contract by 6.9 million barrels per day (bpd), or 6.9%, in 2020, and noted the reduction may not be the last.
Last month, OPEC projected a small increase in demand of 60,000 bpd. OPEC and its allies, including Russia - a group known as OPEC+ - agreed over the weekend to reduce output by 9.7 million bpd for May and June.
Russian energy firms have already significantly revised down their plans for oil exports in May following the OPEC+ deal, three company sources and two traders told Reuters on Thursday. “Low prices are here to stay until there is some clarity on when and by how much non-OPEC+ countries will chip in with additional production cuts,” analysts at Rystad Energy said.
Hoped-for cuts of another 10 million bpd from other countries, including the United States, could lower production by around 20 million bpd, although some analysts have questioned that number.
Published in The Express Tribune, April 17th, 2020.
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