Oil Price Fundamental Daily Forecast – US Travel Ban to Europe Sinks Crude Oil
U.S. West Texas Intermediate and international benchmark Brent crude oil futures are trading lower on Thursday on renewed concerns over global supply after the United States banned travel from Europe following a World Health Organization declaration that the coronavirus outbreak is now a pandemic.
The markets are also being pressured by the threat of a flood of cheap oil after Saudi Arabia announced earlier in the week that it would increase production on April 1 and lower prices substantially. The moves are in retaliation to Russia’s balking at a deal with OPEC+ to reduce output.
At 09:37 GMT, May WTI crude oil is trading $31.81, down $1.58 or -4.76% and June Brent crude oil is at $35.43, down $1.80 or -4.89%.
Demand Woes Continue as Trump Suspends All Travel from Europe
Crude oil prices weakened early Thursday after U.S. President Donald Trump said the United States will suspend all travel from Europe as he unveiled measures to contain the coronavirus epidemic. The travel ban, which excludes Britain, will hit U.S. airlines “extremely hard”, their industry association said.
The surprise move is likely to mean a further drop in demand for jet and other fuels in an already battered oil market, although just how much is hard to quantify.
U.S. Energy Information Administration Weekly Inventories Report
U.S. crude oil stockpiles rose more than expected last week, but gasoline and distillate inventories fell sharply amid low refinery rates, the EIA said on Wednesday.
Crude inventories rose 7.7 million barrels in the week to March 6, compared with analysts’ expectations in a Reuters poll for an increase of 2.3 million barrels.
Gasoline stocks fell 5 million barrels, double analysts’ forecasts. Distillate stockpiles, which include diesel and heating oil, dropped 6.4 million barrels, versus expectations for a 1.9 million-barrel drop, the EIA data showed.
Analysts said the divergent path of crude and product inventories was due to relatively low refining utilization rates, currently at 86.4% of total nationwide capacity and about on par with the last two years.
US EIA Cuts 2020 Oil Demand Growth Outlook to 370,000 b/d on Coronavirus
The EIA slashed another 660,000 b/d off its outlook for 2020 global oil demand growth, now predicting growth of 370,000 b/d from 2019.
Most of the reduction was in Chinese demand, where EIA cut expected growth for 2020 to 100,000 b/d, down from 500,000 b/d in January.
The International Energy Agency said Monday it expects 2020 demand to shrink by 90,000 b/d from 2019.
OPEC said earlier Monday that it expects 2020 oil demand to grow by just 60,000 b/d.
United Arab Emirates Plans to Boost Oil Output
UAE’s national oil company, ADNOC, followed Saudi Arabia in announcing plans to raise crude sales to more than 4 million barrels per day (bpd) and accelerates a push to boost capacity by a quarter to 5 million bpd.
Daily Forecast
The news is bearish so we expect further downside pressure. At this point, it’s going to take a surprise agreement between the Saudi’s and Russia to turn this market around.
Bearish supply and demand outlooks at this time make it hard to see anything except lower prices.
This article was originally posted on FX Empire
