Oil extended its slide to the lowest level in almost 17 years as the coronavirus pandemic threatens to bring the global economy to a standstill, battering demand just as supply explodes.
Oil prices fell for a third session on Wednesday to be down about more than 17% so far this week as the outlook for fuel demand darkened amid travel and lockdowns triggered by the coronavirus epidemic.
WTI Crude oil was down $1.37 or 4.79%, at $25.96 a barrel. Whereas Brent crude was trading down 85 cents, or 2.92%, at $27.89 a barrel.
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The coronavirus crisis is weighing on prospects for demand as people refrain from flying or driving amid lockdowns and border closures.
A drop in U.S. inventories of crude, gasoline and distillates, as reported by an industry group, provided some support to prices, but the demand outlook remains grim amid a price war among major producers.
Moreover, Saudi Arabia and Russia are engaged in a price war. Both major oil producers have increased production and cut prices after failing to extend and deepen the OPEC+ pact which lasted several years.
Osama Rizvi, an Economic and Geopolitical analyst, said, “The decline in oil prices have just started – and at the same time was anticipated. It will go into lower 20s.” He further said that for Pakistan it is better, and he believes prices will remain under 35 for the coming months.
He continued,
However, as I have been repeatedly saying, a downturn due to lower oil prices (in turn a result of Coronavirus and Price War) can effect our exports – as it has been recently. I’d like to point out that I have been saying this from the past one month. Investors should prepare for further sell offs.
FED and other central banks are now down to zero, which is a scary situation. It will take some very strong news and a lot of time for both the benchmarks to cross $35-37.
