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SINGAPORE: Oil languished in a multi-year low on Thursday, with the remaining WTI crude around $ 20 a barrel, as dire warnings of a virus-driven demand shock overshadowed a deal to cut production.
The American benchmark West Texas Intermediate made small gains in the Asian afternoon trade at $ 20.05 a barrel at one point.
It had slipped below the $ 20 mark on Wednesday and reached its lowest price in 18 years.
International benchmark Brent crude, which also suffered heavy losses the day before, rose half a percent to trade at $ 28.12 a barrel.
Prices have plummeted as the coronavirus pandemic reduces global demand, with the situation compounded by oversupply as a result of a price war between the OPEC cartel boss, Saudi Arabia and Russia, which is not OPEC’s rival.
A compromise reached by Riyadh, Moscow and other oil producers over the weekend to cut output by around 10 million barrels a day briefly boosted prices, but the recovery soon faded.
Investors fear the deal will not go far enough to compensate for massive demand losses as storage capacity worldwide is shrinking due to excess.
In addition to trader concerns, the International Energy Agency said on Wednesday that 2020 is likely to be “the worst year in history” for the sector.
By 2020 overall, demand will drop to 9.3 million barrels per day (mbd), with April alone dropping 29 mbd from the previous year to levels last seen in 1995, the IEA said in its latest monthly report.
Stephen Innes, chief global markets strategist at AxiCorp, said the market had found some support in Asian trade on Thursday as it “leaned toward a combination of deeper OPEC + cuts and a more secure response from producers. of the G20 to prevent further oil collapse. “
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