By Adedapo Adesanya
Oil prices closed mixed on Wednesday, April 15 following new rounds of projections by the International Energy Agency (IEA) that global demand will fall by a record 9.3 million in 2020 year-on-year impacted by the coronavirus pandemic.
Major futures, which were already in negatives, plunged further with the international benchmark, Brent crude dropping $1.47 or 4.97 percent to $28.13 per barrel.
On the other hand, the US West Texas Intermediate (WTI) after plunging to as low as $19, regained some of the day’s losses as at press time; up 29 cents or 1.44 percent at $20.43 per barrel.
On Wednesday, an IEA report said that global oil demand will drop by 9.3 million barrels per day for the year, compared with 2019. This month alone, it projected oil demand worldwide to decline by 29 million barrels per day, a level that was last recorded 25 years ago.
Prices have been negatively impacted by the coronavirus pandemic, as government called for strict social distancing to curb the spread of COVID-19 and have caused airlines to cut flights and consumers to stay home.
Measures to cushion this have been futile so far as the latest, an oil production cut, has failed to help the commodity rebound. Over the weekend, producers agreed to historic output cap to support falling demand of the black gold.
The Organisation of the Petroleum Exporting Countries (OPEC) cartel, its allies and other G20 countries agreed to cut production from next month, which the IEA said could not stop the impact of the virus.
Basically, the only thing that can really help the market now is an end of the coronavirus worldwide, which means economic activities, travel, and demand can rise again.
Although at this time, the cut won’t help, it will help in the future as stated in the IEA report that “by lowering the peak of the supply overhang and flattening the curve of the build-up in stocks, they help a complex system absorb the worst of this crisis, whose consequences for the oil market remain very uncertain in the short term.”
“There is no feasible agreement that could cut supply by enough to offset such near-term demand losses,” the IEA said. “However, the past week’s achievements are a solid start and have the potential to start to reverse the build-up in stocks as we move into the second half of the year,” it added.
