By Adedapo Adesanya
Prices of crude oil further increased at the global market for the third consecutive day on Thursday as major crude futures rose, spurred by the possibility of output cuts as increase in the number of COVID-19 cases in China lowered forecasts for oil demand growth.
Brent crude, the international benchmark, gained 36 cents or 0.65 percent to trade at $56.15 per barrel, while the US West Texas Intermediate (WTI) crude gained 17 cents or 0.33 percent to trade at $51.34 per barrel.
Market analysts said that the confirmed cases of COVID-19 (or coronavirus) recently rose in China’s Hubei province, attributed to a change in methodology for diagnosing the virus rather than a sudden increase in transmission.
The epidemic, which placed restrictions on travel to and from China, has lessened demand as new figures as at Thursday night brought total deaths from the outbreak to 1,367, while the total number of confirmed cases rose to 59,805.
This has since triggered another lower demand forecast as the International Energy Agency (IEA) on Thursday dropped its forecast for oil-demand growth for 2020 by 365,000 barrels a day to 825,000 barrel a day.
This is its slowest pace since 2011 as the Paris-based agency said this was due to the coronavirus outbreak, saying that it now expects global demand for crude to grow by 825,000 barrels a day in 2020.
The United States Energy Information Administration (EIA), which on Tuesday cut its global oil demand growth forecast for this year by 310,000 bpd, cited the virus as the reason for this.
On its own end, the Organisation of the Petroleum Exporting Countries (OPEC) lowered its 2020 demand forecast for its crude by 200,000 bpd, with the expectations that the producers’ group and its allies, known as OPEC+, could agree further output cuts. However, Russia continues to delay in agreeing to the deal put forward as it asked for more time to deliberate on the implications of a further cut.
OPEC+ last week recommended a further cut of 600,000 to help keep supply stable and prices performing better and a decision will be reached when OPEC and its allies hold their next official meetings on March 5 to March 6 in Vienna, Austria.
A solid decision will need to be reached during the meeting with considerations on the COVID-19 and rising supply as US crude inventories in the week to February 7 increased by a more than expected 7.5 million barrels, according to data from the EIA indicating a third week of consecutive growth.
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