Crude Oil Price Outlook Worsens Again After Bearish IEA Report
Crude oil prices, news and analysis:
- After a period of relative stability for crude oil prices so far this month, the outlook has deteriorated.
- The International Energy Agency predicts the first quarterly decrease in global oil demand in more than a decade because of the coronavirus outbreak.
Outlook poor for crude oil prices
The price of US crude oil, which has been relatively stable so far in February after dropping sharply the previous month, looks to be under downward pressure again after a downbeat report from the International Energy Agency. According to the IEA, global oil demand in the first quarter of 2020 could fall by 435,000 barrels per day year-on-year, its first quarterly contraction in more than a decade.
It has also cut its oil demand growth forecast for 2020 as a whole by 365,000 bpd to 825,000 bpd – the lowest since 2011 – because of the coronavirus outbreak. For US crude oil that means a drop back below $50 per barrel is now on the cards.
US Crude Oil Price Chart, Four-Hour Timeframe (January 3 – February 13, 2020)
Chart by IG (You can click on it for a larger image)
Oil demand in China has dropped already because of the virus and the Organization of the Petroleum Exporting Countries has lowered its 2020 demand forecast for its crude by 200,000 bpd, prompting expectations that OPEC and its allies including Russia could agree further supply cuts when they next meet, possibly later this month.
Meanwhile, US crude inventories in the week to February 7 increased by a higher than expected 7.5 million barrels to 442.5 million barrels, the Energy Information Administration said Wednesday.
--- Written by Martin Essex, Analyst and Editor
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