The coronavirus outbreak affected global oil prices. Oil prices sank again on Thursday along with the broader market after the United States banned travel from Europe. World Health Organization (WHO) declared that the coronavirus outbreak is now a pandemic.
By the threat of a flood of cheap supply, the market was about in worry. This caused by Saudi Arabia promised to raise oil output to a record high in its standoff with Russia.
Brent crude LCOc1 was trading down $1.91, or 5.3%, at $33.88 by around 0339 GMT, slightly above earlier lows. The contract fell by nearly 4% on Thursday.
U.S. crude CLc1 was down $1.74, or 5.3%, at $31.24 after dropping 4% in the previous session.
The United Arab Emirates followed Saudi Arabia in announcing plans to boost oil output after the collapse last week of an agreement between OPEC, Russia, and other producers, a grouping known as OPEC+, to withhold supply and buttress prices.
Global Oil Market Falls
According to Reuters, “Without OPEC+, the global oil market has lost its regulator and now only market mechanisms can dictate the balance between supply and demand,” said Espen Erlingsen, head of upstream research at Rystad Energy, which estimates that oil will need to fall to the low $20s to achieve equilibrium.
UAE’s national oil company, ADNOC, said it plans to raise crude sales to more than 4 million barrels per day (bpd) and accelerate a push to boost capacity by a quarter to 5 million bpd.
The U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC) have slashed forecasts for oil demand. This caused by the coronavirus outbreak and now expects demand to contract this quarter.
At this point, weekly data on U.S. inventories showed minimal effects from the coronavirus pandemic. Crude stocks increased by 7.7 million barrels. But, inventories of gasoline and diesel fell sharply, as refining runs remain at seasonally low levels.