Oil remained under pressure in Asia, trading near its lowest levels in more than four years, as the coronavirus pandemic threatens to bring the global economy to a standstill, battering demand at a time when supply is surging.
Futures in New York fell as much as 1.3%, after dropping 6.1% on Tuesday. Volatility is at record levels as investors grapple with the possibility of a virus-induced global recession. The Federal Reserve announced the restart of a financial crisis-era program in an effort to stem the virus’s economic impact. U.S. stocks rebounded from the biggest rout since 1987 on the stimulus plan, but oil continued to reel from supply and demand shocks. Saudi Arabia plans to ship a record 10 million barrels a day in April.
Oil markets are coping with an unprecedented upheaval in demand as the pandemic wreaks havoc on travel amid widening lockdowns. Saudi Arabia is seeking to gather leaders from G20 countries for an emergency summit meeting next week to discuss the global response to the escalating health crisis.
The slump in demand is coinciding with a flood of supply as Saudi Arabia and Russia engage in a price war for market share. The instability has prompted Iraq to ask OPEC to hold a meeting of the Joint Ministerial Monitoring Committee to consider steps for re-balancing the global oil market.
The supply and demand shocks have dimmed Wall Street’s outlook for oil. Goldman Sachs Group Inc. said oil consumption is down by 8 million barrels a day and cut its Brent forecast for the second quarter to $20 a barrel. Meanwhile, Mizuho Securities warned crude prices could go negative as Rusia and Saudi Arabia flood the market with supply.
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