A pessimistic demand outlook emerged as new lockdowns in Europe raised fuel consumption concerns ahead of the meeting between OPEC and its allies on the decision on production restrictions. Oil prices fell about 2% on Wednesday.
Brent crude for May, which expired on Wednesday, settled at $63.54 a barrel, down 60 cents, or 0.9%. The more active contract for June ended $1.43, or 2.2%, lower at $62.74.
West Texas Intermediate (WTI) crude futures closed at $59.16 a barrel, losing $1.39, or 2.3%.
Brent was down 3.9% for the month and up 22.6% for the three months ended March 31. WTI fell 3.8% in March and rose 21.9% for the quarter.
Prices soared in the first quarter due to the optimism of recovery in demand following the launch of COVID-19 vaccines in the new year. But these hopes were extinguished this month, as cases that overwhelmed hospitals in European countries and threatened fuel demand resurfaced.
On Wednesday, oil prices increased losses after France announced its third national isolation order and schools would close for three weeks.
Also OPEC and its allies’, which will meet on Thursday, pulling their oil demand growth forecast by 300,000 barrels (bpd) per day for this year impacts the prices.
Given this pessimistic outlook, production quotas are likely to remain in place for another month.
It is said that there is a gradual increase among the options at the meeting to be held on Thursday.
OPEC + is currently cutting production at a rate of just over 7 million barrels a day to boost prices and reduce surplus. Saudi Arabia contributes to these cuts with an additional 1 million barrels daily cut.
The oil market is making predictions on which procurement policy OPEC + will choose at today’s meeting. But the Brent price of $ 64 per barrel shows that traders expect a cautious approach from the alliance.
Meanwhile, it is necessary to maintain cautious optimism that global oil demand will increase as COVID-19 vaccination programs accelerate and industrial production recovers.
According to the Energy Information Administration, US crude inventories, which limited the price decline, dropped unexpectedly last week, shrinking 876,000 barrels compared to analysts’ expectations of an increase of 107,000 barrels.
Also, crude oil production in the US, the world’s largest producer, fell to 11.1 million barrels in January, according to the latest monthly data, and was 13.1% lower than the previous year.
