Oil prices dropped more than $ 1 on Thursday, despite the expectations that the $ 2 trillion US stimulus package would support economic activity as demand continues to drop.
Since three billion people are currently staying at home due to the coronavirus outbreak, it is thought that worldwide oil demand may fall to 20 million barrels per day or 20% of total demand.
West Texas Intermediate (WTI) crude CLc1 futures settled at $22.60 a barrel, falling $1.89, or 7.7%. Brent crude LCOc1 futures settled at $26.34 a barrel, shedding $1.05, or 3.8%. Both contracts are down about 60% this year.
The coronavirus pandemic and the twin shock caused by the increase in supply caused by Saudi Arabia and Russia’s disagreement shook the crude oil markets, which lost about half of their value in March.
The U.S. Senate unanimously sent the $ 2 trillion law to the House of Representatives, which struggles with the impact of the coronavirus outbreak, aimed at helping the industry. Parliament is expected to vote the law by Friday. However, this promise of support do not enough serve investors’ worn nerves.
Twin shocks fluctuate through the oil industry. The world’s largest oil and gas companies reduce their spending by approximately 20%, while oil refineries are lowering processing rates due to sluggish demand.