Oil Trades Mixed as OPEC Projects 6.9% Demand Slash

By Adedapo Adesanya

Oil prices closed mixed on Thursday as the Organisation of the Petroleum Exporting Countries (OPEC) said global oil demand will fall by 6.9 percent this year.

The global benchmark, the Brent Crude, gained 23 cents or 0.47 percent to trade at $27.82 per barrel, while the US West Texas Intermediate dropped 29 cents or 1.46 percent to close at $19.58 per barrel, the lowest level since February 2002.

OPEC said in a monthly report on Thursday that it now expects global demand to contract by 6.9 million barrels per day this year, making a turn from 60,000 barrels per day projected early March.

According to the report, oil demand contraction in Q2 2020 is expected to be around 12 million barrels per day.

The cartel also said that downward risks in oil demand forecast remains significant, suggesting possibility of further adjustments.

Meanwhile, oil output rose by 821,000 bpd month on month in March to average 28.61 million barrels per day.

This is coming after agreement by OPEC and its allies, including Russia and members of the G20 to reduce output by over 9.7 million bpd for May and June.

The shutdown of major economies in the effort to contain the COVID-19 pandemic has led to slowdown in demand for oil and expectations for further growth in surplus supplies.

Forecasts for continued weak demand showed that the production cut agreed by OPEC may not be enough to support commodity prices.

This brings more worries for the market after the International Energy Agency (IEA) on Wednesday forecast a record drop of 9.3 million barrels a day in oil demand this year.

The Paris-based agency forecasts demand dropping by as much 29 million b/d year on year in April followed by a plunge of 26 million b/d in May.

April could prove the worst month ever for the industry as production is set to increase while demand tumbles amid economic lockdowns around the world, IEA Executive Director, Mr Fatih Birol said.

Oil prices have fallen a lot this year, weighed down by the coronavirus pandemic and the OPEC price war that happened during the outbreak. As a result, US WTI has fallen as much as 67 percent year-to-date, while Brent crude has fallen 55 percent so far in 2020.