Weakening demand drove oil prices below $ 27



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Weakening demand drove oil prices below $ 27



Oil prices plummeted below $ 27 in international markets Wednesday amid a downturn in demand for a coronavirus pandemic, which overshadowed US stimulus expectations.

In the London market, barrel prices fell 49 cents from the previous close to $ 26.66. The US barrel traded at 42 cents, down from $ 23.59.



In both markets, prices briefly rose more than a dollar after the US Senate and the White House agreed on a huge stimulus package worth $ 2,000 billion, which Congress is expected to confirm throughout the day.

The trend has changed as global demand for petroleum products, especially jet fuel, falls due to stricter isolation measures that governments seek to stem the spread of coronavirus infection.

Refineries around the world are responding to declining demand by reduced processing, and today they are joined by those in India. The country is second in population and third in oil consumption and announced a 21-day quarantine this week.

The CEO of the world's largest oil trader Vitol Group estimates demand will drop by 15 to 20 million barrels a day in the coming weeks.

Vitol reported that refineries have cut processing by about seven million barrels a day so far. They also expect to further reduce and fill the tank in parallel.

Although futures prices in futures contracts “rose this morning, fueled by a good mood, the physical oil market is facing an increasing threat of oversupply, which will soon bring traders to the wall,” said Rystadu Energy's Bjornar Tonhaugen.

ING lowered its barrel price forecast for the London market in the second quarter from $ 33 to $ 20 due to a coronavirus pandemic and expected supply growth from Saudi Arabia and Russia in April.

Separately, the Organization of the Petroleum Exporting Countries (OPEC) announced this morning that the price of a barrel of its members' reference basket of oil was $ 26.53 on Tuesday, which means that it has increased $ 1.81 compared to the previous trading day.

Weakening demand drove oil prices below $ 27

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