Oil prices steadied on Wednesday with Brent crude LCOc1 up by 34 cents. Or 1.2 %, at $ 29.07 a barrel by 02:38 GMT. Earlier it fell to $28.40, the lowest since early 2016. The international benchmark dropped 4.3% on Tuesday.
US crude Clc1 climbed by 13 cents, or 0.5%, at $27.08 a barrel. Earlier, it fell to as low as $26.20, also the weakest in four years. West Texas Intermediate declined 6% on Tuesday.
Oil prices have been sapped by fears for fuel demand and the global economy amid travel bans and social lockdowns triggered by the coronavirus epidemic.
Fitch Solutions stated that demand growth is set to recover from H2 2020, as the impact of COVID-19 fades and affected economies post-v-shaped recoveries. The combination of the oil price breakdown and the spread of the virus has raised global recession risks. They slashed its forecast for Brent this year from an average of $62 previously to an average of $43. The industry group reported that a fall in US inventories of crude, gasoline, and distillates provided some support to prices. Still, the demand outlook remains grim amid a price war among major producers.
In efforts to support economies to lessen the fallout from the coronavirus outbreak, the world’s wealthiest nations prepared to release trillions of dollars of spending. They also imposed social restrictions not seen since World War Two.
Official statistics are starting to show de impact on oil demand. Japan’s trade bureau said on Wednesday that crude imports into the country fell 9% from a year earlier in February. Virgin Australia was the latest airline to shut down its global network with the suspension of all overseas flights. At the same time, Scott Morrison, Prime Minister of Australia, warned that the situation could last six months or more.
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Iraq asks OPEC for an emergency meeting with OPEC+
In Australia, Oil Search Limited (OSH.AX), the largest oil and gas exploration company, joined other energy explorers in slashing expenses and new activity to cope with the fall in prices.
Iraq’s oil minister asked for an emergency meeting. It will take place between OPEC (Organization of the Petroleum Exporting Countries) members, and non-OPEC produces to address critical move to help stabilize the oil market.
A week earlier, an agreement on withholding supply between OPEC and primary producers, a grouping known as OPEC+ including Russia, collapsed. Led by Saudi Arabia, OPEC launched a price war. Saudi triggered a significant fall in the price of oil. The US prices drop by 34%, crude oil falling by 26%, and Brent declining by 24%.
Thamer al-Ghadhban, Iraqi oil minister, asked OPEC to help urgently reach emergency meetings of the OPEC+ group to consider all possible actions to restore the balance of the oil market.
Fitch said that it is doubtful that the current market conditions represent the desired outcome for either Saudi Arabia or Russia. Some miscalculations have been made by both sides. Thus, both hold polarized and uncompromising negotiating positions and increasingly hardline rhetoric, which limits the scope for near term resolution,” it added.