Jerome Powell’s made a statement, stating that US economic growth is likely to be at its lowest level since 1929. Oil prices have, as a result, returned to a downward trend in today’s trading.
Oil prices fell slightly today as concerns remain about the possibility of a recession due to Coronavirus. However, with the gradual improvement of demand yesterday, compared to previous trading sessions, the prices have seen an increase. 
Brent crude fell 0.3 per cent to $34.54 a barrel in trading on Wednesday. West Texas Intermediate crude traded down 0.4 per cent at $31.83.
Numerous factors, including declining production by OPEC Plus, the gradual lifting of restrictions and optimism on the discovery of a new vaccine, have pushed up oil prices over the past three weeks.
However, yesterday’s remarks by the president of the Federal Reserve reduced investors’ concerns about the country’s economic outlook.
Gerome Powell, the head of the US Federal Reserve, stated that more than 36 million people in the United States had already applied for unemployment benefits. According to him, economic growth is expected to reach its lowest level since the 1929 crisis. The US unemployment rate will be in the double-digits by the end of the year.
In the week ending on May 15, US oil reserves fell by 4.8 million barrels to 521.3 barrels, according to reports.
Coronavirus is still being a threat to the oil market
Michael Lynch, a senior writer and oil economist at Forbes, believes that in the next two years, Coronavirus will dominate the oil market. It will reduce economic activity and demand for oil but we will see oil recovery as reserves decline.
The continuation of the downward trend is still unclear. Lynch believes that as long as oil inventories do not fall sharply, oil prices will not be above $50 a barrel. Besides, OPEC’s adherence to their agreement last month to reduce production was one of the most important factors influencing the market.
OPEC members will meet next month to review the state of the oil market. They may make some amendments to the April agreement. At this meeting, the group may decide to extend the current level of production cuts. It is at the level of 9.7 million barrels per day. However, if the market demand improves, there will be no need to do so. In any case, any decision by this group can have a significant impact on the oil market. On the other hand, a return to business in many countries poses the potential for a second wave of coronavirus outbreak. This scenario could bring the oil market back to where it was in April.
Another critical issue is the level of shale production in the United States. Some oil companies have previously announced that they will resume production at oil wells at about $30 a barrel. Julian Lee, a financial analyst at Bloomberg, said that there is a twofold risk on the horizon. Just as a rapid return of Coronavirus can lead to a jump in the number of cases and deaths, the rapid decline in production restrictions, that have been so difficult to combat, will fall.
