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Crude oil futures dropped for a second consecutive session on Tuesday (March 17) to their new lowest in four years. This is because that investors focused on forecasts of significant impact on demand from the global spread of the COVID-19 pandemic, and the increase in oil supplies as Russia and Saudi Arabia participated in a global oil price war, MarketWatch reported.
In terms of oil supply, IHS Markit is forecasting that monthly global oversupply may range from 4 million barrels a day to 10 million barrels a day from February to May 2020, Marshall Steeves, an energy market analyst expert at IHS Markit said.
Closing the session on Tuesday, the contract of WTI light sweet crude oil delivered in April on Nymex dropped by 1.75 USD (equivalent to 6.1%) to 26.95 USD / barrel, the lowest closing level since February 2016. Data from Dow Jones Market shows.
Brent oil contract in May on London exchanges lost 1.32 USD (equivalent to 4.4%) to 28.73 USD / barrel – the lowest closing level since January 2016.
“The huge slump of demand in the future will be a factor that determines time and extent of decline,” said Steeves. The US stock market plunged on Monday (March 16), witnessing the third worst session in history, after US President Donald Trump said “it is likely in July or August before weakening epidemic ”.
A note from Societe Generale on Tuesday warned that “destruction of oil demand” would peak in the second quarter of 2020, with 5 million barrels a day of oil demand ” lost in those three months”.
Most of the decline in demand will come from the countries of the Organization for Economic Cooperation and Development (OECD) – in the Euro area, Korea, Japan and the US, although “oil consumption will gradually become normal and catch up when demand may be stronger than previously expected. ”
Meanwhile, Russia and Saudi Arabia showed no signs of backing down with the oil price war that began after Moscow rejected the call of cutting output from Organization of the Petroleum Exporting Countries (OPEC).
Also on Tuesday session, the contract of gasoline delivered in April jumped 3.1% to 71.14 cents / gallon. Meanwhile, the contract of natural gas delivered in April dropped by 4.7% to 1,729 USD / MMBtu.
Heating oil contract for April delivery lost 1% to US $ 1,0357 / gallon.

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