Oil prices slipped back in Asian trade on Thursday, as a Senate vote on a massive stimulus package to help the coronavirus-ravaged United States economy was delayed. Brent crude was down 1.7 per cent at $26.70 per barrel on Wednesday as faltering fuel demand outweighed a massive pending U.S. economic stimulus package.
Equities resumed their slide today as a historic $2 trillion USA fiscal stimulus deal failed to offset worries about a looming recession caused by the coronavirus spread.
Brent crude futures fell $1.04, or 3.75%, to $26.35 a barrel.
The U.S. Senate on Wednesday overwhelmingly backed a $2 trillion bill aimed at helping unemployed workers and industries hurt by the CCP virus epidemic.More news: BC announces $500-per-month rental supplement, temporary halt on evictions
But with demand disappearing and output rising, the outlook is bleak. For the year, oil consumption is expected to contract by around 4.25 million bpd, the Wall Street bank said.
The lack of storage room will lead to the global oil industry to look for alternative places to store the extra crude.
The losses were said to have been incurred partly due to Fatih Birol, executive director of the International Energy Agency, warning that demand could drop by as much as 20 million barrels per day (bpd), and by the White House deciding to rescind a crude buying offer after failing to win funding from Congress.
The market expectation was an increase of 2.77 million barrels.More news: After agreeing to delay, Tokyo Olympics in uncharted territory
Oil prices have fallen by more than 45 per cent this month after OPEC+, comprising the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russian Federation, failed to agree on extending output cuts.
Oil stocks are already rising with tanks around the world filling fast despite a 50%-100% jump in leasing costs.
"Even if we do see some restraint from the Saudis, the world is still set to see a significant oil surplus over 2Q20, given the demand hit we are now seeing".
The U.S.' crude oil imports decreased by 422,000 barrels per day (bpd) to 6.12 million bpd for the week ending March 20, and crude oil exports saw a decline of 528,000 bpd to 3.85 million bpd, according to the EIA data.More news: Britney Spears wants people to ‘strike’ and ‘redistribute wealth’