TOKYO (Reuters) – Oil prices fell again on Thursday, adding to steep losses in the previous session after the U.S. banned travel from Europe following a declaration that the coronavirus outbreak is now a pandemic.
The threat of a flood of cheap supply compounded market concerns as Saudi Arabia promised to raise oil output to a record high in a standoff with Russia.
Brent crude LCOc1 was trading down $1.03, or 2.9%, at $$34.76 by around 0130 GMT having switched in and out of positive territory before the U.S. announcement. The contract fell nearly 4% on Thursday.
U.S. crude CLc1 was down $1.13, or 3.4%, at $31.85 after dropping 4% in the previous session.
The United Arab Emirates followed Saudi Arabia in announcing plans to boost oil output after the collapse last week of an agreement between OPEC, Russia and other producers, a grouping known as OPEC+, to withhold supply and buttress prices.
UAE’s national oil company, ADNOC, said it plans to raise crude sales to more than 4 million barrels per day (bpd) and accelerate a push to boost capacity by a quarter to 5 million bpd.
The push comes as the coronavirus outbreak spreads around the world at a rapid rate, prompting countries from Italy to Iran to take ever more drastic measures like lockdowns to control the spread. U.S. President Donald Trump late on Wednesday U.S. time announced a ban travelers from Europe.
“Without OPEC+, the global oil market has lost its regulator and now only market mechanisms can dictate the balance between supply and demand,” said Espen Erlingsen, head of upstream research at Rystad Energy, which estimates that oil will need to fall to the low $20s to achieve equilibrium.
The U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC) have slashed forecasts for oil demand because of the coronavirus outbreak and now expect demand to contract this quarter.
Weekly data on U.S. inventories showed minimal effects from the coronavirus pandemic. Crude stocks increased by 7.7 million barrels, but inventories of gasoline and diesel fell sharply, as refining runs remain at seasonally low levels.
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