NEW YORK - Oil prices slumped more than US$1 a barrel on Thursday (26/3) as global fuel demand continues to weaken amid the coronavirus (Covid-19) pandemic.
According to International Energy Agency Executive Director Dr Fatih Birol, global oil demand could fall as much as 20 million barrels per day or 20% of total demand due to travel restrictions imposed to prevent the spread of the coronavirus.
As reported by Reuters, West Texas Intermediate (WTI) crude futures fell 7.7% to US$22.60 a barrel while Brent crude futures fell 3.8% to US$26.34 a barrel. Crude markets have been heavily affected by the supply surge from Saudi Arabia and Russia following the two countries’ failure to reach an agreement to limit supply.
“With demand down 20% or more globally, it’s two Saudi Arabias-worth of production that would need to be cut out to try to even attempt to balance this market,” said John Kilduff from New York’s Again Capital.
In addition, US crude futures were considerably lower than Brent crude as the country’s Department of Energy dropped a plan to purchase domestic crude oil for its Strategic Petroleum Reserve (SPR) after funding was not included in the government’s US$2 trillion stimulus package.
The stimulus package bill was unanimously passed by the US Senate as part of the country’s effort to aid industries affected by the Covid-19 pandemic. The House of Representatives is expected to vote on the bill on Friday (27/3). (MS)