As increasingly large swathes of the global economy grind to a halt, oil consumption will be dealt a heavy blow, Trend reports citing UK-based Capital Economics research and consulting company.
In fact, the company analysts think that the slump in oil prices can be explained by demand and supply market fundamentals.
“Energy commodities had a mixed month in March. But the biggest story continues to be the collapse in oil prices, which took another leg-down earlier this week as measures taken to contain the coronavirus were bolstered and lockdowns extended in many countries around the world. And OPEC+ oil supply is set to surge from April, leading to a huge market surplus,” reads a report released by Capital Economics.
Oil prices plummeted in March under the weight of a collapse in demand and pledges from OPEC+ members to significantly raise output. Most other commodity prices also fell last month as the COVID-19 virus spread from Asia to Europe and the US. “We think there is little upside to prices while the virus-containment measures remain in place.”
The collapse in oil prices continued to be the main story in energy commodities as the increasingly strict measures taken to contain the virus weighed heavily on demand and spooked investors, said the company.
Meanwhile, European natural gas prices (TTF) slumped last month. “And, given that around one-third of US gas is used by industry, we expect US prices will soon follow as industrial activity comes to a standstill. By contrast, coal prices rose across the board as coal consumption in China picked up.”
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