Global fuel demand under pressure due to the coronavirus outbreak is performing a cumbersome recovery. Oil prices plummeted on Tuesday, amid this alarming situation and warnings from major oil producers confirming the bleak outlook.
Brent crude LCOc1 was down 4 cents, or 0.1%, at $39.57 a barrel by 0642 GMT, while U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 2 cents, or 0.1%, at $37.24 a barrel.
Both contracts ended slightly lower the previous day.
Concerns about supply cuts from the impending storm in the United States provided some price support. Energy companies, harbors and refineries raced to close on Monday due to Hurricane Sally, the second major hurricane that halted oil and gas operations, the first of which was last month.
Nevertheless, global prices were limited for the short-term ahead of a key meeting later this week by the Organization of Petroleum Exporting Countries (OPEC) and its allies known as OPEC + to discuss compliance with ambitious output cut programs to raise prices. However, analysts do not expect further discounts, despite Brent prices falling below $ 40 a barrel in recent days.
Brent and WTI are likely to stay between $ 35 and $ 40 a barrel until the US demand for heating oil begins to recover, as the peak driving season ends.
Major oil industry producers and traders do not anticipate a positive future for worldwide fuel demand due to the epidemic’s ongoing attack on the global economy.
In a monthly report, OPEC said world oil demand will decline by 9.46 million barrels a day this year. This is more than the expected 9.06 million barrels drop a month ago.
The pledge to end Libya’s long-standing blockade of oil facilities also supports concerns about increased global supply.
Meanwhile, while working to refine the record-high crude oil imported earlier this year, China’s crude oil production in August reached the second-highest level, up from a year ago.