OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS/Ramzi Boudina/File Photo
OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS/Ramzi Boudina/File Photo

Oil prices plunged for the week ending Feb. 28 with the prices of West Texas Intermediate (WTI) for April delivery down 16.15 percent and Brent crude oil for April delivery down 13.64 percent.

As demand collapse concerns continued to dominate the market amid the further spread of the COVID-19, WTI and Brent crude settled lower for a sixth straight session on Friday. WTI closed the week at 44.76 dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 50.52 dollars a barrel on the London ICE Futures Exchange, both hitting their lowest since December 2018.

The jump in cases of coronavirus in other parts of Asia, as well as in Middle East and Europe, caused fears that a protracted global outbreak would impact economic growth and oil demand around the world.

“While the pace of reported new COVID-19 outbreaks in China has begun to slow, it remains to be seen what the global impact is, as more cases emerge and travel restrictions and quarantine efforts are becoming more widespread in regions outside of China,” Goldman Sachs analysts said in a note Thursday.

Even though a smaller-than-expected increase in U.S. crude stockpiles during the week ending Feb. 21 provided a support to oil prices, the weeklong nosedive has erased all gains witnessed in the previous two weeks, during which the oil prices were in the longest run of gains in more than a year thanks to China’s fiscal stimulus and emerging threats to crude oil supplies from Africa and Latin America. WTI and Brent crude decreased by 26.70 percent and 23.45 percent, respectively, so far this year.

Meanwhile, the U.S. Dollar Index retraced back below the 2019 high and traded in three weeks’ lows near 98.00 level, crushing bulls’ hopes. A higher index makes the U.S.-dollar-sensitive crude oil more expensive for foreign buyers.

For the upcoming weeks, analysts expect the oil prices to run under pressure. S&P Global Platts Analytics has revised its forecast of 2020 demand growth down by 470,000 barrels per day from its previous projection, as the market sentiment remained volatile due to the uncertainty over demand.

In the meantime, market participants are hoping that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, would announce greater production cuts to prop up the prices.

Last December, the OPEC+ group agreed to deepen production cuts by an additional 500,000 barrels a day, bringing the total cuts to 1.7 million barrels daily. The OPEC and its allies are scheduled to meet in Vienna on March 5-6. Enditem

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