Global crude oil prices slid further on Wednesday, following their biggest-ever quarterly and monthly losses, as a bigger-than-expected rise in U.S. inventories and a widening rift within OPEC heightened oversupply fears.
Oil prices are near their lowest since 2002 amid the global coronavirus crisis that has brought a worldwide economic slowdown and slashed oil demand. Crude futures ended the quarter down nearly 70% after record losses in March.
As of 0643 GMT, Brent crude LCOc1 was down by $1.02, or 3.9%, at $25.33 a barrel. U.S. West Texas Intermediate crude Clc1 was down 35 cents, or 1.7%, at $20.13 a barrel, after giving up an earlier gain which analysts said was driven by position building at the start of a the new quarter.
U.S. crude inventories rose by 10.5 million barrels last week, far exceeding forecasts for a 4 million barrel build-up, data from industry group the American Petroleum Institute showed.
“The market sentiment remains bleak as there is no clarity on how long the pandemic will continue,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Asian shares and Wall Street futures also fell on Wednesday as the coronavirus pandemic and the prospect of a global recession tore through investor confidence.
Nearly 800,000 people have been infected across the world and more than 38,800 have died, according to a Reuters tally.
The bearish mood in the market was also fuelled by a rift within the Organization of the Petroleum Exporting Countries (OPEC). Saudi Arabia and other members of OPEC were unable to come to an agreement on Tuesday to meet in April to discuss sliding prices.
“It is very unlikely that OPEC, with or without Russia or the United States, will agree a sufficient volumetric solution to offset oil demand losses,” BNP Paribas analyst Harry Tchilinguirian said in a report issued on Tuesday.
Adding to the downward pressure, sources told Reuters that top U.S. officials have for now put aside a proposal for an alliance with Saudi Arabia to manage the global oil market.
The Trump administration plans to lease out space for energy companies to store oil in the nation’s Strategic Petroleum Reserve, after a previous effort to buy millions of barrels for the emergency stockpile was cancelled over a lack of funding.
A Reuters survey of 40 analysts forecast Brent would average $38.76 a barrel in 2020, 36% lower than the $60.63 forecast in a February survey.