The Price of Brent Crude Oil Fell Below $ 28 Per Barrel

Hülya Karahan: Production Editor

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The price of Brent crude oil fell below $ 28 per barrel for the first time since January 2016.
The price of May futures for the North Sea Brent oil mix is ​​reduced to $ 27.62 per barrel. The cost of WTI crude oil initially reached $ 26.05 per barrel for the first time since November 2002, and later amounted to $ 25.95.

The impact of coronavirus on the economy

Oil prices continue to renew multi-year lows amid concerns about the prospects for demand due to the coronavirus epidemic.

World oil prices at auction on Wednesday, March 18, updated at least since January 2016.
Oil prices have been declining for the third consecutive session, having lost about 17% this week amid concerns about the prospects for demand due to the coronavirus epidemic.

According to a Goldman Sachs survey, which predicts a drop in Brent prices to $ 20 per barrel in the second quarter. This level has not been since the beginning of 2002.

The Bank also expects a reduction in demand of 8 million barrels per day by the end of March due to the coronavirus pandemic and an annual decline in 2020 of 1.1 million barrels per day, which will be a record.

The effect on oil demand is beginning to show up in official statistics. A Japanese trade bureau said Wednesday that oil imports in the world’s third largest economy fell 9% from a year earlier in February.

This week the price of oil began to fall against the backdrop of the actual zeroing of the US Federal Reserve rate. The Fed management decided to lower the target range of rates to 0-0.25% as part of the fight against risks due to coronavirus.

A week earlier, the fall in oil prices was facilitated by the failure of the negotiations of the OPEC + member countries. As a result, from April 1, restrictions on oil production in the member countries of the former alliance are lifted.

Barrel quotes are falling, despite data from the American Petroleum Institute (API) on a decrease in US reserves and the decision of US President Donald Trump to increase the strategic oil reserve by 77 million barrels.

On Tuesday, March 17, Iraqi Oil Minister Tamer al-Gadban called for an emergency meeting of OPEC + participants to discuss urgent measures to restore balance in the oil market.

Oil prices began to decline from the beginning of the year against the backdrop of the coronavirus epidemic and accelerated the fall after the deal to reduce OPEC + oil production was not extended. Officially, the parties to the transaction retain obligations to reduce production until April 1, 2020.

The largest oil producing countries after the collapse of OPEC +, announced their intention to increase production by the end of this year by a total of 4-6 million barrels per day. Russia promised over the same period to increase production by 500 thousand barrels per day. The excess supply on the oil market is now 0.8-1.2 million barrels per day.

Oil quotes and exchange rates collapsed after the news that members of the Organization of Petroleum Exporting Countries could not extend the agreement to reduce production. So, Brent crude oil at the beginning of last week reached a minimum since January 2016, WTI – from February of the same year. Another factor affecting the nationals and global economies remains the coronavirus pandemic.

On Monday, March 16, Brent updated its four-year low, falling by more than 12% and dropping below $ 30 a barrel. The cost of WTI decreased by 10%. However, the next day, prices recovered slightly. Traders fear that the measures taken will not prevent the recession of the world economy and will not change the situation around oil production.

The cost of futures for Brent crude oil for delivery in May 2020 during trading on the ICE exchange in London fell by 2.75%, reaching $ 27.9 per barrel.

The last time oil of this grade was at this level in January 2016, reports TASS.

The cost of the WTI oil futures is losing 4.9% and is at around $ 25.96 per barrel, at the level of May 2003.

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The Price of Brent Crude Oil Fell Below $ 28 Per Barrel - /10

Summary

The price of Brent crude oil fell below $ 28 per barrel for the first time since January 2016.

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