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Oil Prices Decline On Demand Worries

Oil prices fell on Tuesday as concerns surrounding a coronavirus-driven collapse in global oil demand outweighed planned output cuts from the world’s biggest producers as well as expectations of a drop in U.S. shale oil production next month.

Benchmark Brent crude eased half a percent to $31.59 a barrel, after having risen 0.8 percent on Monday.

U.S. West Texas Intermediate (WTI) crude futures were down 1.6 percent at $22.05, after having fallen 1.5 percent the previous day.

Analysts and oil industry executives expect a contraction of around a third of global oil demand due to the coronavirus outbreak.

Global oil demand is being destroyed as the coronavirus continues to spread around the world, forcing people to remain indoors and avoid all unnecessary travel.

Inventories are expected to fill up fast despite some countries among the G20 agreeing to buy oil for their national reserves.

On the positive side, the U.S. Energy Information Administration (EIA) said it expects U.S. shale output to decrease sharply this month and next.

U.S. shale oil production is expected to drop by 193,625 barrels per day from March this month, while output is seen at 8.526 million barrels per day come May, according to new data published on Monday.

The material has been provided by InstaForex Company – www.instaforex.com