The market has “reacted correctly” to expectations that the new coronavirus will reduce oil demand by 2-3 million barrels per day, at least for several weeks, and that Russia and Saudi Arabia will increase production by at least 2 million barrels per day. said Michael Lynch, president of Strategic Energy & Economic Research.
“This will create huge stocks, 100-150 million barrels a month,” Lynch said.
But even this sharp drop in price “seems likely to encourage the Russians to offer the Saudis an agreement that will lead to a short-term but strong decline in production,” he added.
The price of West Texas Intermediate Oil with April delivery rose by 0.7% on the New York Mercantile Exchange, to $ 31.73 a barrel, while Brent Oil with May delivery rose 1.9% $ 33.85 per barrel at ICE Futures Europe.
During the week as a whole, WTI oil fell by 23% and Brent oil by 25%. Both representing the largest percentage declines for one-month contracts since December 2008, according to Dow Jones Market Data.