Oil Prices Remain Mixed as Market Faces Gloomy Times
By Adedapo Adesanya
Oil prices continued to trade mixed into the third straight day on Friday, April 17 as the market continue to be faced with a drastic future due to the current coronavirus pandemic.
The US West Texas Intermediate (WTI) seems to be largely affected mostly by this as it dropped 8.81 percent or $1.75 to trade at $18.27 per barrel.
Meanwhile, although still not at a strong level, the Brent Crude rose 53 cents or 1.91 percent to sell at $28.35 per barrel on Friday night.
This week has faced a lot of negative news and forecasts from the oil market and this has done nothing but worsen fears as global storage may fill up in a matter of weeks as a result of cheap supply.
China reported a contraction in GDP of 6.8 percent for the first quarter of the year.
The Organisation of the Petroleum Exporting Countries (OPEC) affirmed in its Oil Market Report that demand would fall by 6.9 mb/d this year. Storage fears are now beginning to dominate market sentiment.
Demand, which is the major problem of the market at the moment, will only worsen and the International Energy Agency (IEA) has it sees a fall of 9 million barrel per day.
Global oil giants are acting quickly to take more oil off the market. Saudi Arabia announced it would cut its exports to Asia by an additional 2 million barrels per day starting in May, but much of the damage is already done.
Between the continued overproduction and storage capacities on the brink of being filled, U.S. and other major oil markets could face many months of massive imbalance.
Eventually, demand will recover as treatments for COVID-19 help reduce the health risk, but the massive glut of oil in storage could weigh on oil markets for the next year or more.
Even measures of easing lockdown parameters announced by China and United States have not helped the market as intended.
On the part of the US, President Donald Trump has given Governors guidance on reopening state economies in the coming months.
The guidelines for Opening up America Again outline three phases for states to gradually ease their lockdowns.
Phase one includes much of the current lockdown measures such as avoiding non-essential travel and not gathering in groups, Phase two involves allows non-essential travel to resume and will involve schools and bars, while Phase three will involve allowing public interactions with physical distancing as long as the cases don’t rise.