Global oil market remains oversupplied despite continued cuts

April 16, 2020

Abstract : Global oil prices rose slightly from April 6 to April 12 as OPEC and its allies, known as OPEC Plus, reached a preliminary deal to gradually reduce oil output until 2022, but the cuts still cannot address the glut in the oil market, and oil prices are expected to continue the downward trend.

InfoQuest, (April 15, 2020) -- Global oil prices rose slightly from April 6 to April 12 as OPEC and its allies, known as OPEC Plus, reached a preliminary deal to gradually reduce oil output until 2022, but the cuts still cannot address the glut in the oil market, and oil prices are expected to continue the downward trend, according to Mr. Watthanaphong Kurovat, director of the Energy Policy and Planning Office (EPPO).

According to the preliminary agreement reached by OPEC and OPEC Plus, oil production will be cut by 9.7 million barrels a day from May to June 2020, 8 million barrels a day from July to December 2020 and 6 million barrels a day from January 2021 to April 2022. Saudi Arabia and Russia agreed to cut output by 2.5 million barrels a day each. But analysts estimated the cuts by OPEC Plus and other producers will not be enough to address the glut caused by the Covid-19 outbreak.

Global commodities trader Trafigura recently predicted that oil demand would fall to about 35 million barrels a day by April 2020 as a result of the Covid-19 outbreak, and that low oil prices could lead to renewed problems for the U.S. energy industry.

The Thai baht rose 0.03 baht per U.S. dollar from last week, with an average exchange rate of 32.9722 baht against U.S. dollar, pushing up the cost of gasoline by 0.18 baht per liter and that of diesel by 0.07 baht per liter. The average price of gasoline, ethanolgasoline and diesel was 2.09 baht per liter, and the average gross refining margin (GRM) was 0.58 baht per liter.

The total assets of the Oil Fuel Fund as of 12 April 2020 were 56.54 billion baht and liabilities were 20.391 billion baht. Its net profit stood at 36.149 billion baht, including 41.837 billion baht in the oil account and -5.688 billion baht in the liquefied petroleum gas (LPG) account.

Source: InfoQuest, by Wilawan Pongpitak/ Rachada, translated by Xinhua Silk Road

Notice: No person, organization and/or company shall disseminate or broadcast the above article on Xinhua Silk Road website without prior permission by Xinhua Silk Road.