Oil continues to decline from previous session levels, and falls to its lowest levels in two decades, with the supply glut continuing despite production cuts.
Brent oil futures fell 2.14% before the opening of the European session, at $ 27.50 a barrel. Whereas, NYMEX crude (West Texas Intermediate) contracts recorded $ 23.77 an ounce, a decrease of 5.03%, for June contracts, while April contracts fell to levels of $ 15 a barrel. Noting that the April contracts expire in a few hours.
Investors have not been persuaded by OPEC + cuts of more than 10 million barrels per day, and demand fears persist against the backdrop of the continued state of closures imposed in order to prevent the spread of the Corona virus, which is also causing an economic downturn.
“Current prices demonstrate that the market is not convinced of OPEC cuts, and oil remains at the mercy of the Coronavirus again,” Vandana Harry, founder of Vanda Insights, told Bloomberg.
David Lennox, an analyst at Fat Profits, agrees with Harry.
He told Bloomberg: “The current or assumed production cuts in the coming days are not enough to address the supply shortfall of between 25 to 30 million barrels per day of demand due to COFFED 19. We have to reach the global peak of the virus before we see the full picture of the devastation of supply.”
Concerns are also hovering over the ability of countries to quickly restore previous levels of demand.