Oil prices rise on possibility of supply cuts

Brent Crude and WTI Crude oil prices continue to increase as the investors shift their focus on a possibility of more supply cuts by the oil producers.

The Organisation of the Petroleum Exporting Countries (OPEC) has lowered its demand forecast for 2020 by nearly 2,00,000 Barrels Per Day (BPD) mainly because of the serious impacts of Coronavirus breakout in China, which is one of the world’s largest importers of oil and the outbreak of the virus has considerably slowed down the business activities in the country hence, impacting its economy. As a result of this, the companies have been affected globally, since China has put travel restrictions to and fro in the country as well as quarantine within it. This will possibly impact the oil demand negatively in the first quarter of 2020, before a recovery in the second quarter, provided the situation in China improves. An improved sentiment in Asian markets as well as a hope for stimulus from Chinese central bank, will improve the demand for oil in the next quarters.

Since the beginning of February 2020, Brent Crude was up by 5.12 per cent and stood at USD 57.24 per barrel as on February 14, 2020 whereas, US West Texas Intermediate (WTI) rose by 3.87 per cent and stood at USD 52.05 per barrel during the same period.