Oil prices fall over impact on demand
Oil prices fell below $57 a barrel due to the impact on demand accredited to the Coronavirus outbreak in China and lack of proactive actions by Organisation of Petroleum Exporting Countries (OPEC) and its allies to support the market, industry analysts revealed.
Specifically, Brent crude on Tuesday shed $1.18 at $56.48 a barrel after rallying in the previous five sessions, while U.S West Texas Intermediate crude fell 95 cents to $51.10 per barrel.
But analysts claimed that risk aversion has returned to the markets, as OPEC+ has shown no sign yet of reacting to the virus-related slump in demand by making additional production cuts. “This has spooked market players and triggered the sharp pullback in risk assets,” said Tamas Varga, of oil broker PVM, referring to Apple’s statement.
The IEA last week said that first-quarter oil demand is likely to fall by 435,000 barrels per day (bpd) from the same period last year in the first quarterly decline since the financial crisis in 2009.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, have been considering further production cuts to tighten supply and support prices.
The group, known as OPEC+, has a pact to cut oil output by 1.7 million bpd until the end of March. Meanwhile, our correspondentgathered that the next OPEC+ meeting in March is set to consider an advisory panel’s recommendation to lower supply by a further 600,000 bpd, as talks on holding an earlier meeting in February appear to have made no progress.
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