Oil prices have declined over the International Energy Agency’s (IEA) forecast of a market surplus in the first half of this year.
The surplus forecast surpassed worries on disruptions due to the Libya conflict.
According to Reuters, Brent crude futures fell $0.30 to$64.29 a barrel. US West Texas Intermediate (WTI) oil fell $0.33 to $58.05 a barrel.
The US Energy Information Administration (EIA) said that supply may still increase. It expects US crude inventories production in large shale deposits to rise significantly next month.
IEA head Fatih Birol said: “I see an abundance of energy supply in terms of oil and gas.
“It’s the reason that recent incidents we have seen, with the Iranian general killed, Libya unrest, didn’t boost international oil prices.”
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According to a Reuters poll, US crude oil inventories are likely to have fallen for a second week last week.
Investors are yet to receive API report today, while EIA report is due tomorrow.
Meanwhile, financial markets have been destabilised globally with the rise of a new strain of coronavirus in China.
Goldman Sachs said that if the virus develops to SARS-like proportions, it could impact travel and growth. This could lead to a fall of 260,000bpd in oil demand.
It added: “Demand concerns over a potential epidemic will counter concerns around supply disruptions in Libya, Iran and Iraq, driving spot price volatility in coming weeks.
“Impact on oil fundamentals remains limited so far.”