In light of the COVID-19 global outbreak and the travel restrictions imposed by the US President Donald Trump, the oil prices dropped by $2.01. In fact, Brent crude LCOc1 oil was down by 5.6%, at $33.78 by around 0930 GMT. US crude CLc1 was down $1.77, or 5.4%, at $31.21, Reuters reported.
Specifically, the two benchmarks are down by 50% in comparison to highs reached back in January 2020, marking their biggest one-day decline since the 1991 Gulf War.
Following President Trump’s travel ban, global shares were also down, as it is expected to further drop the fuel demand.
“If the crisis persists for another two or three months, many companies will go bankrupt, especially those in the U.S. energy sector which also have to deal with an oil price war”…said to Reuters, Hussein Sayed, chief market strategist at FXTM.
The U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC) have slashed forecasts for oil demand due to the COVID-19 situation and now expect demand to contract this quarter.
Although, according to weekly data based on US inventories, coronavirus has still minimal effects upon the oil industry. Specifically, crude stocks marked an increase by 7.7 million barrels, but inventories of gasoline and diesel fell sharply, as refining runs remain at seasonally low levels.
