Oil holds near $30, caught between demand loss and supply cuts
LONDON: Oil prices edged higher on Wednesday, reversing earlier losses, and Brent held near $30 a barrel as potential OPEC+ plans to deepen supply cuts were tempered by demand concerns exacerbated by a possible second wave of coronavirus infections as countries ease lockdowns.
Brent crude climbed 17 cents, or 0.57%, to $30.15 a barrel by 1138 GMT, after hitting a low of $28.92 a barrel earlier.
West Texas Intermediate crude futures rose 13 cents, or 0.5%, to $25.91 after falling to $25.07 a barrel.
“Fears are running rife that easing lockdown measures will trigger a second wave of coronavirus infections,” said Stephen Brennoc at oil brokerage PVM.
U.S. infectious disease expert Anthony Fauci on Tuesday told Congress that easing coronavirus lockdowns could set off new outbreaks of the COVID-19 disease that has killed 80,000 Americans and badly damaged the world’s biggest economy and oil consumer.
New outbreaks have been reported in South Korea and China, where the health crisis started before spreading across the globe, prompting governments to lock down billions of people, devastating economies and demand for oil.
The U.S. Energy Information Administration (EIA) now expects world oil demand to fall by 8.1 million barrels per day (bpd) this year to 92.6 million bpd, compared with a previous forecast for a drop of 5.2 million bpd.
The agency also expects U.S. output to fall by 540,000 bpd, against a previous forecast of 470,000 bpd.
It expects global output of 11.7 million bpd this year and 10.9 million bpd in 2021.
SUPPLY CUTS
On the supply side, OPEC+ is looking to maintain existing cuts beyond June, when it meets next in Vienna, sources told Reuters.
The Organization of the Petroleum Exporting Countries and other producers including Russia - a group known as OPEC+ - agreed to cut output by 9.7 million bpd in May and June and to scale back cuts to 7.7 million bpd for the rest of the year. - Reuters