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Oil prices Down as Demand Fears Bite

By Gina Lee

Investing.com - Oil prices dropped on Thursday morning in Asia as the COVID-19 pandemic hit demand.

Oil prices could not hold onto gains from the last session even as the U.S. Senate reached agreement on a $2 trillion relief package.

International Brent Oil Futures fell 0.77% to $27.17 by 10:01 PM ET (02:01 AM GMT) and U.S. Crude Oil WTI Futures fell 1.35% to $24.15.

Oil demand is continuing to take a hit as the COVID-19 pandemic severely curtails travel and more countries order lockdowns to curb the spread of the disease. India, the second most populous country and the third largest oil consumer in the world, started a 21-day lockdown yesterday.

Bjornar Tonhaugen, head of oil markets at Rystad Energy, told CNBC that although oil futures received a “sentiment-led boost this morning, the challenge for the physical oil market is a looming and growing oversupply which will cause a ‘nowhere to hide’ situation very soon.”

Meanwhile, the Energy Information Administration (EIA) reported a rise of 1.6 million barrels in U.S. crude inventories in the week ended March 20. The raise is much smaller than analyst expectations of a 2.8 million increase, according to a Reuters poll.

The American Petroleum Institute (API) estimated a draw of 1.247 million barrels for the week ending March 21 yesterday.

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