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US crude hits 17-yr low as lockdowns spread

Saudi Arabia to boost oil exports to 10m barrels per day



US crude hits 17-yr low as lockdowns spread

Oil prices fell for a third session on Wednesday with US crude futures tumbling to a 17-year low as travel and social lockdowns sparked by the coronavirus epidemic knocked the outlook for demand, reports Reuters.

US crude Clc1 was down $1.15 cents, or 4.27 per cent, at $25.80 per barrel by 0938 GMT, having earlier fallen to $25.68, its lowest since May 2003.

Brent crude LCOc1 was trading down 78 cents, or 2.71 per cent, at $27.95 a barrel, after dropping to $27.86, its lowest since early 2016.

"The oil demand collapse from the spreading coronavirus looks increasingly sharp," Goldman Sachs said in a note forecasting a fall in the price of Brent to as low as $20 in the second quarter, a level not seen since early 2002.

The bank expects a demand contraction of 8 million barrels per day (bpd) by late March and an annual decline in 2020 of 1.1 million bpd, which it said would be the most on record.

In efforts to support economies, the world's richest nations prepared to unleash trillions of dollars of spending to lessen the fallout from the coronavirus outbreak, as well as imposing social restrictions not seen since World War Two.

Rystad Energy projects a year-on-year decrease of 2.8 per cent or a fall of 2.8 million bpd in global oil demand this year. "To put the number into context, last week we projected a decrease of just 600,000 barrels," Rystad said.

The consultants expect demand in April to fall by 11 million bpd compared with 2019.

The impact on demand is starting to show in official statistics with Japan's trade bureau saying on Wednesday that crude imports into the world's third-biggest economy in February were down 9 per cent from a year earlier.

AFP adds from Riyadh: Saudi Arabia said Tuesday it plans to boost oil exports to more than 10 million barrels per day as the OPEC kingpin escalates a price war with Russia.

The world's biggest crude exporter said it would free up an additional 250,000 bpd of oil for exports by using gas for domestic consumption. "Saudi Arabia will utilise the gas produced by the Fadhili gas plant to compensate for around 250,000 bpd of domestic oil consumption," a spokesman for the Saudi energy ministry said in a statement without detailing how one would replace the other. This "will enable the kingdom to increase its crude exports during the coming few months to exceed 10 (million bpd)."

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