Oil prices significantly increase after experiencing losses for the past five days. The OPEC is expected to extend the oil cuts if the Wuhan coronavirus would affect oil prices and demands for the commodity as the latter already caused the decline of US stockpiles.
Last Wednesday, oil prices rose after suffering a decline in demand for the last five days. Brent crude rose by 0.6 percent to 33 cents amounting to 59.84 per barrel. The US crude was also up by the same rate at 31 cents selling at 53.79 per barrel, according to Financial Post.
According to a senior market analyst at OANDA, challenges in the oil market appears to be stabilizing for now. He added that the Wuhan coronavirus threats have eased in the day that caused a 4.3 million barrel drop with the American Petroleum Institute data. It was also announced that there had been a boost for energy prices as well.
The report revealed that financial markets hit by the Wuhan coronavirus have investors withdrawing their stocks. The withdrawal was said to be caused by the comments made by the head of the World Health Organization who supported China's efforts in beating the viral outbreak.
According to Oil Price, oil prices began stabilizing last Tuesday after OPEC and its partners announced their willingness to extend output cuts until June of 2020. Hence, US oil production is expected to reach 13.3 million barrels per day this year. The yield was referred to as a nine percent increase from last year's forecasts.
The report claimed that the drastic drop in oil prices since last week should concern the industry since it could indicate that there would be a renewed oil supply surplus. It was said that an OPEC source claimed that the group would further cut from today's foreign levels. It was then declared that the current oil deal would expire in March of 2020.
It was also explained that oil prices have been dropping by seven USD in the past week. Some analysts allegedly believe that selloff has become excessive. In a note, Barclay claimed that the uncertainties caused by the Wuhan coronavirus persist and that it could be possible that demand worries were over anticipated.
RBC Capital Markets also claimed that the coronavirus outbreak is a 'Chinese jet fuel demand story' for the meantime and does not constitute a global demand epidemic.
It was also reported that Libyan oil production also fell by 280,000 BPD. The said drop was assumed to have been caused by the blockage of LNA at the country's oil export terminals. It was also discussed that Libya has a very small storage capacity of its oil products that the head of the National Oil Corp. revealed that production is falling to zero.
