WTI Crude Oil Slides Lower – COVID-19 Fears Offset Support From Tighter Supply
Aiswarya Gopan • 1 min read
Early on Wednesday, WTI crude oil extends its bearish mood from the previous session, sliding lower as a continued increase in COVID-19 cases worldwide raised concerns about demand slowing down despite some countries reporting supply disruptions. At the time of writing, WTI crude oil is trading at around $74.54 per barrel.
WTI oil ended Tuesday 0.2% lower while UK Brent oil lost almost $2 per barrel after rising to an almost three-year high in the previous session. Crude oil has been experiencing considerable volatility in recent sessions as worries about supply disruptions and tightening offset a rise in COVID-19 cases, which are keeping the situation on the demand side uncertain.
At the upcoming OPEC+ meeting scheduled for next week, expectations are for the leading oil producing nations to keep the supply side tight to stabilize oil prices. Despite the uncertainties surrounding the pandemic, OPEC and its allies are likely to face some pressure from other countries who are facing pressure in purchasing oil on account of the recent price surge.
On Tuesday, OPEC forecast that oil demand is likely to continue to rise in the coming years, cautioning the need for nations worldwide to invest in oil production despite climate change concerns raising the need for cleaner sources of energy. One of the biggest consumers of oil worldwide, China, is facing a risk of economic slowdown, and analysts expect this to have a severe impact on oil demand in the coming months.
Crude oil prices are also likely to face pressure from this week’s inventories’ report from the US. According to a recent poll by Reuters, economists are forecasting a build in crude stockpiles in the US by 4.1 million barrels over the past week while gasoline and distillate inventories are also expected to post an increase during the period.