Oil remains unsteady despite decrease in inventories

LONDON, May 14, 2020 – Oil was mixed on Thursday morning in Asia, with dark clouds on the horizon for the black liquid despite a decrease in inventories.

Brent oil futures slipped 1.46% to $28.98 by 9:45 PM ET (2:45 AM GMT) but WTI futures gained 0.04% to $25.30.

The US Energy Information Administration (EIA) reported a 745,000-million-barrel decrease in US crude inventories overnight, the first decline since January. Analyst forecasts prepared by Investing.com predicted an increase for 4.147 million barrels.

The EIA also said that it now expects world oil demand to fall by 8.1 million barrels per day in 2020 to 92.6 million bpd, compared with a previous forecast for a drop of 5.2 million bpd.

OPEC also slashed its world oil demand forecast in its monthly report on Wednesday. The organization now expects demand to shrink by 9.07 million bpd this year, compared to its expected contraction 6.85 million bpd last month.

A second wave of COVID-19 virus cases in China and South Korea are continuing to raise investor fears that storage tanks will fill up faster than expected as demand shrinks again.

“Fears are running rife that easing lockdown measures will trigger a second wave of coronavirus infections,” Stephen Brennoc at oil brokerage PVM told CNBC.

Meanwhile, OPEC+ announced that the organization looks to extend existing cuts until the end of the year. Members will cut production by 9.7 million barrels in May and June, with a further 7.7 million bpd cut for the rest of the year. The organization is scheduled to meet next in June, in Vienna.

“Suffice to say, the tug-of-war between OPEC-led cuts and virus anxieties will limit upside price potential, PVM’s Brennoc added.

By Investing.com: https://www.investing.com/news/commodities-news/oildowndespitedecrease-in-inventories-2171655

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