NEW DELHI : Global oil prices remained suppressed, with countries going into a lockdown amid concerns over the Covid-19 outbreak.

The West Texas Intermediate (WTI) traded at $23.41 per barrel on Wednesday, while the international benchmark Brent was trading at a 16-year low of $26.02 per barrel, far below the highs of $147 per barrel of July 2008.

Goldman Sachs expects crude prices to touch the $20 per barrel mark. Analysts said the current oil supply surplus situation is possibly the worst ever recorded.

Growing concerns over the Covid-19 outbreak and surplus production from Saudi Arabia, the United Arab Emirates and Russia have roiled global crude oil markets. The build-up will affect US shale oil producers.

The unfolding scenario has turned the oil market on its head, with major energy-consuming economies recalibrating their sourcing strategy against the backdrop of growing concerns over a deep global recession. US President Donald Trump called for crude oil purchase for the strategic petroleum reserve, while India is exploring ways to leverage the depressed prices for its ambitious Indian Strategic Petroleum Reserves programme.

“The convergence of geopolitics, economic slowdown and the Covid-19 pandemic should keep oil prices low for a long while from here," Crisil Ratings wrote in a report.

Experts are of the opinion that global oil demand for the March-April period could come down by around 10 million barrels per day (mbpd). This is significant as the daily global demand was around 101 mbpd.

“The Covid-19 pandemic has made the already subdued demand outlook grimmer. The spread has led to demand disruption in major crude oil-consuming nations," the Crisil report said. “Some countries/regions with increasing Covid-19 cases such as the US, Europe, China, Japan, South Korea, and now even India, account for ~71% of the global economy. The spread of the virus would deal a severe blow to their industries and supply chains and impact oil demand from these geographies."

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