Oil prices seemed to have stabilised on Thursday after incurring major losses in the previous session, followiung a record increase in US crude stocks.

Brent crude LCOc1 dropped 19 cents to $27.50 a barrel, while US West Texas Intermediate (WTI) gained seven cents to settle at $19.94 per barrel, reported Reuters.

Earlier, the US Energy Information Administration reported its largest increase in inventories when crude stocks jumped by 19 million barrels last week. Following the report, US WTI slipped to its lowest levels since February 2002, while Brent lost around 6% of its value.

Recently, the OPEC+ group of major oil producing countries, including members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia, agreed to reduce output by 9.7 million bpd to support oil prices.

However, analysts say the massive impact of Covid-19 in decreasing global demand is far greater than the agreed production cuts.

In a note, ING bank was quoted by Reuters as saying: “Given the scale of demand destruction this quarter, OPEC+ cuts will fall short of bringing the market to balance anytime soon, and this is reflected in the price weakness seen since the OPEC+ deal.”

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The International Energy Agency (IEA) also shared similar view when it noted that output cuts will not be able to restrict the near term fall in oil prices.

In a report, the agency also predicted oil demand will plummet by 29 million barrels a day this month to the lowest level in the last 25 years.