While Oil prices dropped on Wednesday in accordance with the US raw inventories rising the most since last week, gasoline demand also fell its biggest weekly drop due to the coronavirus pandemic.
The U.S. Energy Information Administration (EIA) said inventories rose 13.8 million barrels last week. This was the biggest one-week rise since 2016. Although refineries have reduced supply, similar data are expected in the coming weeks, mainly due to the falling demand for gasoline.
West Texas Intermediate (WTI) crude CLc1 fell 17 cents to settle at $20.31 a barrel, after hitting a low at $19.90.
June Brent crude LCOc1 fell $1.61 , or 6.1%, to $24.74 a barrel. The global benchmark fell to $21.65 on Monday, its lowest since 2002, when the now-expired May contract was the front month.
The market experienced a sharp decline not only with the supply and price war caused by the collapse of the oil supply deal last month but the dropping demand caused by coronavirus outbreak as well. Brent crude dropped 66% in the first three months of 2020.
Undoubtedly, the possibility of troubled cargoes, increased freight rates, force majeure, difficulties on storage capacity, availability of VLCC, may create additional negative pressures on oil prices.
Despite Putin and Trump’s oil-related positive reproaches and all of the negativities happening, Saudi Arabia is said to have persistently increased production over 12 million bpd in recent months.
Trump invited many energy industry executives to a meeting Friday to discuss an industrial support, including possible tariffs on oil imports from Saudi Arabia.
News of these efforts intermittently increased futures prices, but the matter of falling demand is anyway desperate for the refineries and physical crude oil players.
Unfortunately, it is unlikely that OPEC may accept a volumetric solution sufficient to offset oil demand losses, with or without Russia or the United States.