Oil prices slide as virus saps demand
West Texas Intermediate (WTI) crude oil contracts dropped at close of trading on Wednesday (April 1) after US oil stocks rose more than expected as demand plunges amid the coronavirus pandemic.
Nymex market-traded WTI crude oil contracts to be delivered in May dropped 17 cents or 0.8 per cent to US$20.31 per barrel, while Brent crude oil contracts dropped by $1.35 or 5.1 per cent to $24.99 per barrel.
The US Energy Information Administration (EIA) revealed that US crude oil stocks had risen by 13.8 million barrels for the week ending March 27, higher than analysts’ expectation of 4.6 million barrels and marking the 10th straight weekly increase.
Meanwhile the American Petroleum Institute (API), the US oil industry group, revealed that US crude oil stocks rose by 10.5 million barrels in the week previous.
In addition, API revealed that benzene stocks rose by 7.5 million barrels – higher than analysts’ predictions of 3.6 million barrels, while refined oil including heating oil and diesel oil dropped by 2.2 million barrels, lower than analysts’ expectations of 600,000 barrels
Oil prices were pressured by uncertainty amid a Saudi-Russia oil price war and declining demand due to the Covid-19 pandemic and economic recession.
Saudi Arabia initiated the oil price war after Russia refused the Organisation of Petroleum Exporting Countries (OPEC)’s request to oil producers to cut production capacity by another 1.5 million barrels per day until the end of this year. Russia insisted on maintaining production capacity at the original quota until the end of the second quarter.