Crude prices recorded their worst ever quarter, losing as much as 66 percent, as lockdowns forced by the coronavirus (COVID-19) pandemic and the collapse of OPEC's production pact led to a perfect storm for oil demand
NEW YORK (Pakistan Point News / Sputnik - 01st April, 2020) Crude prices recorded their worst ever quarter, losing as much as 66 percent, as lockdowns forced by the coronavirus (COVID-19) pandemic and the collapse of OPEC's production pact led to a perfect storm for oil demand.
Brent, the global benchmark for crude, closed down 0.3 percent on the day to end March trading at $26.37 per barrel on Tuesday. For the month, it fell 48 percent and for the quarter it lost 61 percent.
West Texas Intermediate (WTI), the benchmark for US crude, finished the day up 2 percent at $20.48. It, however, slumped 54 percent on the month and 66 percent on the quarter.
Historical data showed the monthly and quarterly losses as the biggest for Brent and WTI.
"Until markets can start to understand how bad the demand shock will be since practically the whole world is on lockdown, most oil rallies will get faded," said Edward Moya, senior analyst at New York-based online trading platform OANDA. "It is becoming obvious that lockdown measures around the world will need to be extended and that will likely make everyone's GDP decline forecast a little uglier."
In a gloomier outlook for the US economy, leading Wall Street bank Goldman Sachs recast its second quarter real gross domestic product (GDP) forecast to an annualized drop of 34 percent, versus its previous prediction of negative 24 percent.
The COVID-19 pandemic has dampened some 90 percent of global economic activity as authorities worldwide locked down or restricted the movement of about three billion people. The pandemic itself has infected more than 825,000 people and killed over 40,000.
For oil, the loss of demand from the pandemic has been heightened by Saudi Arabia's determination to grow its output by 30 percent to 12 million barrels per day by end-April in a bid to wrest market share from Russian and US competitors. The kingdom's production hike plan came after Moscow refused to extend earlier this month its output cuts pact with Riyadh under the OPEC+ initiative.
Some oil traders are, however, hopeful that new US-Russian production controls might come into place after President Donald Trump's and his Kremlin counterpart Vladimir Putin had a telephone conversation on Monday on the need to put a floor under global crude prices.
Separately, some oil drillers in Texas, the largest US crude producing state, are trying to ask local regulators to impose state-wide production quotas in a bid to control output and get the market back up.
