Oil prices have fallen by 5% to around $28 a barrel on Wednesday. Reports have suggested persistent oversupply and collapsing demand in face of coronavirus-related lockdowns across the world.
According to Reuters, Brent crude declined by $1.49 to $28.11 a barrel. Meanwhile, US crude CLc1 fell by $0.51, to $19.60 a barrel.
The International Energy Agency (IEA) forecast a 29 million barrel per day (bpd) dive in oil demand this month, to the lowest levels not seen in 25 years. These predictions added to downward pressure caused due to build in inventories.
Reuters quoted IEA report as stating: “There is no feasible agreement that could cut supply by enough to offset such near-term demand losses.
“However, the past week’s achievements are a solid start.”
The OPEC+ group, a group including OPEC nations and other oil producers such as Russia and Mexico, has partnered with countries like the US for a record supply cuts deal.
The group agreed to cut output by a record 9.7 million barrels per day (bpd) in May and June, to counter the collapse of prices due reduced demand during Covid-19 lockdowns.
This cut represents about 10% of global oil supply before the pandemic.
Meanwhile, industry group American Petroleum Institute (API) said US crude inventories have increased by 13.1 million barrels. This rise was more than analysts expected.
Investors are still awaiting official government inventory figures which are due to be released later today.