Crude Oil Edges Higher; OPEC Forecasts Help
Investing.com
Published Apr 16, 2020 09:48AM ET
By Peter Nurse
Investing.com - Oil markets edged higher Thursday, rebounding after Wednesday’s hefty selloff and helped by a relatively more conservative estimation of demand destruction by OPEC.
AT 9:45 AM ET (1345 GMT), U.S. crude futures traded 1.9% higher at $20.25 a barrel, while the international benchmark Brent contract rose 1.4% to $28.08.
U.S. crude prices fell to an 8-year low and Brent lost more than 6% on Wednesday after the United States reported its biggest weekly inventory build on record.
But prices bounced back Thursday, aided by the latest Monthly Oil Report from the Organization of Petroleum Exporting Countries, which forecasts that global oil demand will fall by 6.85 million barrels a day this year.
This forecast will have contributed towards the formation of the OPEC+ deal, finalized on Sunday, which envisages production cuts of 9.7 million bpd in May and June, but then with the cuts tapering through the rest of 2020, 2021 and the first quarter of 2022.
Still, as large as that drop is, it pales alongside Wednesday’s International Energy Agency prediction of a 9.3-million-barrel-a-day drop in 2020.
Rystad Energy, an independent energy research company, takes a stance much closer to the IEA's view, forecasting a decrease of 9.6% for 2020, or 9.6 million barrels per day (bpd) year on year.
“To put the number into context, last week we projected a decrease of 9.4 million bpd,” Rystad said.
With this in mind, it’s difficult to see these crude price gains lasting given the latest illustrations of the extent of the slowdown to the U.S. economy, the world’s largest.
The number of Americans applying for initial unemployment benefits rose by 5.24 million last week, bringing the number of people laid off over the past month to almost 22 million. This has resulted in the last decade's worth of jobs growth being completely erased in a month.
The dismal figures came a day after data showing a record drop in U.S. retail sales in March and the biggest decline in factory output since 1946.
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Written By: Investing.com
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