The oil price is under further pressure in today’s trading session after yesterday reaching its lowest level since 2002 after a daming report by the world’s energy watchdog.
The International Energy Agency (IEA) has put the market on notice that demand for oil is expected to reach its lowest level in 25 years on the back of the worldwide pandemonium caused by the coronavirus which has virtually brought the economy to a standstill.
Even the worlds biggest production cut deal agreed to by Opec countries, Russia and the US as well as a number of other countries will not help the cause and even when the virus is semi contained which most think will happen in the 2nd half of the year will also not be enough to beef up demand.
“Even assuming that travel restrictions are eased in the second half of the year, we expect that global oil demand in 2020 will fall by 9.3m barrels a day versus 2019, erasing almost a decade of growth,” the IEA said.
Demand for oil in April is predicted to slump around 29 million barrels per day , which according to the IAE is likely to go down as one of the darkest day’s for the oil market and its producers which we have ever seen
“I believe, in a few years time, when we look back on 2020, we may well see it was the worst year in the history of global oil markets. And during that terrible year, the second quarter may well have been the worst of the lot. And during that quarter, April may well have been the worst month.It may well go as ‘Black April,’ in the history of the oil industry.” Said executive director Fatih Birol from the IEA
With oil hanging around the $20 mark, and any dip below this finding strong support, the question is now how long can this last because any significant break below the phycological level is likely going to cause sever panic and further losses.
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