Oil prices dropped on Friday and turned to third weekly losses as production restrictions could not yet keep pace with the declining demand due to the coronavirus crisis.
Brent crude LCOc1 was down 73 cents, or 3.42%, at $20.60 by 0838 GMT, after hitting a session high of $22.70/bl earlier and jumping 5% on Thursday. WTI oil CLc1 fell by 84 cents, or 5.09%, to $15.66 a barrel, having surged 20% in the previous session.
Prices have been falling for the eighth week in the past nine weeks, and Brent continues with a 27% of loss this week, and the West Texas Intermediate (WTI) is down 14%.
WTI fell to the negative zone on Monday, down to minus $ 37.63 a barrel, while while Brent dropped to a two-decade low.
It was a week, like a lesson in the oil market, that hits the issues on to people’s face. Active crude oil production stoppages appeared before May arrived.
Major oil producers in some US states stopped most of their production and recommended that those who grasp the subject should take a similar stance.
According to the agreed agreement between the Organization of Petroleum Exporting Countries (OPEC) and OPEC +, other producers, including Russia and Azerbaijan, production cuts to 9.7 million barrels per day (bpd) will begin from May.
Kuwait said on Thursday it would begin cutting oil sales to international markets without waiting for the official start of the agreement.
However, with the rapid filling of global storage areas and decreasing oil demand by about 30%, these cuts are thought to be insufficient to rebalance the market. If the cuts are not increased, the over production will not have a place to store oil, which will necessarily require some pumping facilities to be closed.
On the demand side, according to analysts, in China, where the coronavirus epidemic began late last year, fuel sales are expected to increase in the second quarter, as the government has eased the bans and restrictions it has announced to control the pandemic.
Meanwhile, the U.S. has approved a $ 500 billion bill that provides support to small businesses and hospitals. The package raises the spend to combat the crisis in the US for about $ 3 trillion.