Oil prices have slipped as worldwide lockdowns to contain the Covid-19 pandemic suppressed demand. The decrease countered expectations of a $2tn emergency stimulus package to boost the economy.

According to Reuters, Brent crude futures were down by $1.04 to $26.35 a barrel. At the same time, US West Texas Intermediate (WTI) crude futures fell by $0.94 to $23.55 per barrel.

AxiTrader market strategist Stephen Innes told the news agency: “Oil markets received a lift from the US stimulus chatter, but for the most part activity remains rudderless, awash in a sea of oil.”

In the US, the White House and the Senate have agreed an economic stimulus package worth more than $1.8tn to combat the economic fallout of Covid-19.

Data from the Energy Information Administration (EIA) showed that US crude inventories rose by 1.6 million barrels last week. The Guardian reported that worldwide storage will soon reach capacity, further lowering oil’s trading prices.

However, Goldman Sachs analysts have said global oil demand will likely slump 18.7 million barrels per day (bpd) in April. In March, demand fell by 10.5 million bpd.

Reuters reported that Saudi Arabia plans to ship more than ten million bpd from this May.

Coronavirus effects on oil prices

A demand reduction at the start of the Covid-19 pandemic has caused the current weak oil prices, thereby increasing pressure on crude prices which Goldman expects will remain near $20 per barrel in the second quarter this year.

The collapse of a supply cut agreement proposed by the Organization of the Petroleum Exporting Countries (OPEC) further led to a fall in oil prices.

This led to a price war between Saudi Arabia and Russia. The countries have both increased oil production, leading to over-production suppressing oil prices.

Meanwhile, global deaths from Covid-19 virus have crossed 19,656, while about 111,877 are reported to have recovered from the virus. The confirmed case total stands at 438,441.

It is now estimated that around 20% of the world’s population is under lockdown.