WTI drops below $23, erases more than 6% on the day
- Oil struggles to make a recovery amid concerns over falling demand.
- IEA says global oil demand could decline by 20% due to lockdowns.
- US Department of Energy cancels oil purchases for strategic reserve.
After posting modest recovery gains during the first half of the week, crude oil prices came under renewed selling pressure on Thursday. As of writing, the barrel of West Texas Intermediate (WTI) was trading at $22.80, losing 6.2%, or $1.5, on a daily basis.
Dismal demand outlook hurts WTI
Concerns over a protracted decline in the global energy demand due to worldwide lockdowns to stop the spread of the coronavirus continue to weigh on crude oil prices. While speaking at a conference on Thursday, Fatih Birol, the head of the International Energy Agency (IEA), said that the global oil demand could drop as much as 20 million barrels per day (BPD), or 20%, in 2020.
Birol further added that the global oil storage capacity could soon be filled up and added that the demand recovery was not expected to be neither easy nor quick.
Meanwhile, the US Department of Energy announced that it has cancelled planned crude oil purchases for the strategic reserve citing lack of funding in the coronavirus relief package and further weighed on crude oil prices.
Technical levels to watch for