Oil price fell on Thursday after the U.S. announced the World Health Organization’s decision to announce an outbreak of coronavirus and accordingly Trump’s ban to suspend all trips from Europe for thirty days, except Britain.
The surprise means that even though it is difficult to quantify the move in an already shaken oil market, the demand for jet and other fuels drops further. So we are talking about a new supply shock, it would not be right to create another scenario.
The deadlock, caused by the excessive oil supply and interest with Saudi Arabia and Russia continues to reflect as a serious threat on oil prices.
Brent crude is trading at $ 34.14 at 0718 GMT, down $ 1.65 or 4.6%. The contract dropped about 4% on Wednesday.
US West Texas Intermediate (WTI) crude oil dropped 4% in the previous session to $ 31.60, down 1.38 or 4.2%.
Both criteria fell nearly 50% from the highest levels reached in January, and had a biggest daily drop on Monday since the Gulf War in 1991 after Saudi Arabia starting the price war.
The price gap between short-term and long-term Brent prices, which has reached the highest level in five years today, causes traders to stock up on higher volumes of oil.
OPEC + has lost its ability to regulate the global oil market, and now only market mechanisms can dictate the balance between supply and demand. The solution to reaching the balance is possible by providing an increase of $ 20.
The U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC) have stopped estimates for oil demand due to the coronavirus outbreak and are now awaiting a shrinking demand for this quarter.