(Bloomberg) -- Oil was stuck near $20 a barrel and set for a second weekly loss after a wave of gloomy demand forecasts outweighed optimism that a deal from the world’s biggest producers would alleviate virus-led demand losses.
OPEC expects demand for its crude to fall to the lowest in three decades as the coronavirus outbreak freezes the global economy, the group said Thursday. That followed a prediction from the International Energy Agency that 2020 could be the worst year in the history of the oil market. Futures slumped to an 18-year low this week, even after a historic agreement to curb supply.
In a joint statement Thursday, Saudi Arabia and Russia said they will “continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary.”
Stockpiles across the world continue to expand as consumption of everything from gasoline to jet fuel crashes due to lockdowns to stem the outbreak. The Trump administration is considering paying American companies to leave crude in the ground, while ConocoPhillips (NYSE:COP) is the latest energy major to announce deep cuts to its operations, slashing more than a quarter of its North American production and halting all U.S. fracking.
“The latest market response suggests that the output cuts are having limited effect other than to perhaps stall an inevitable moment of reckoning when stocks exceed capacity and tanks overflow,” said John Driscoll, chief strategist for JTD Energy Services Pte in Singapore. “The cuts are not enough.”
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West Texas Intermediate for May delivery added 6 cents, or 0.3%, to $19.93 a barrel on the New York Mercantile Exchange as of 10:08 a.m. Singapore time. The contract closed unchanged at $19.87 on Thursday, the lowest since 2002, and is down about 12% this week. Brent for June delivery gained 2.2% to $28.42 on the ICE (NYSE:ICE) Futures Europe exchange after climbing 0.5% on Thursday.
Dated Brent, the benchmark for two-thirds of the world’s physical supply, was assessed at $18.86 on Thursday, compared with $18.08 on Wednesday, according to S&P Global Platts.
OPEC estimates that just under 20 million barrels a day will be needed on average from the group during the second quarter, according to its monthly report. The cartel hasn’t pumped this little crude since early 1989. OPEC and its allies have agreed to curb output by 10% starting next month, but even with full compliance, the market is still likely to be oversupplied.
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