Crude Oil Bounces, but Gains May Be Short-Lived


© Reuters.

By Peter Nurse – Oil prices edged higher Thursday, bouncing after recent hefty losses, despite the International Energy Agency laying bare the extent of the damage to global crude demand caused by the outbreak of the in China.

By 10:10 AM ET (1510 GMT), futures were 0.8% higher at $51.59 a barrel, while futures in U.K. , the global crude benchmark, were up 1% at $56.53 a barrel.

Article continues below Advertisement...

The has posted five losing weeks in a row, and this week had been looking like extending the run. Combined losses over this period leave the oil complex in bear-market territory, creating plenty of room for a bounce.

Adding to the positive tone Thursday is the uncertainty surrounding the timeline for the restarting of the Exxon (NYSE:) refinery in Baton Rouge, La. after Wednesday’s fire.

But it’s difficult to see much further upside for oil prices unless there are significant to producer levels given the hit to demand caused by the outbreak of Covid-19 in China.

Global oil demand is now set to see its first quarterly contraction in more than a decade, the International Energy Agency said, estimating a drop of 435,000 barrels a day during the first three months of the year. It had previously expected world fuel consumption to grow by 800,000 barrels a day compared with a year earlier.

The expected decline in demand prompted the agency to cut its 2020 growth by 365,000 bpd to 825,000 barrels a day, the lowest since 2011.

Further evidence of weakening consumption came from the U.S. reporting the biggest weekly jump in crude stockpiles in three months.

So, eyes are firmly fixed on the globe’s major producers to see whether they can agree to limit production once more.

Technical experts from the Organization of Petroleum Exporting Countries and its allies, a group known as +, recommended a further cut of 600,000 barrels a day in early February. However, Russia, a key producer, has so far resisted the initiative, asking for time to the proposal.

Russia will settle its position in a “timely” way, a Kremlin spokesman said on Thursday. This suggests a decision won’t be arriving any time soon.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the , it is one of the riskiest forms possible.



Please enter your comment!
Please enter your name here