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Global oil prices rise then fall as demand fears outweigh stimulus efforts

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Posted: Friday, March 27, 2020. 10:05 am CST.

By Aaron Humes: Global oil prices rose briefly at the start of trading this morning then fell sharply, reflecting uncertain economic times.

Reuters reports that demand destruction caused by the COVID-19 pandemic outweighed stimulus efforts by policymakers around the world, as the United States faced the prospect of becoming the next global epicenter of the pandemic.

Brent crude was down $1.26, or 4.8%, at $25.08 a barrel by 1336 GMT. U.S. crude was down 84 cents, or 3.7%, at $21.76 (all prices U.S. dollars).

According to Reuters, contracts were on track for a fifth consecutive weekly drop. They are down nearly two thirds this year and the Covid-19-related slump in economic activity and fuel demand has forced massive retrenchment in investment by oil and other energy companies.

Global oil requirements could drop as much as 20 percent or 7.4 million barrels per day, putting producers like Saudi Arabia in some trouble trying to sell more.

This is even as countries pass major stimulus packages designed to curb fears about Covid-19’s death toll.

However, the U.S. is now the leading reporter of infections with more than 85 thousand while according to Reuters, Mainland China reported its first locally transmitted coronavirus case in three days and 54 new imported cases as Beijing ordered airlines to implement sharp reductions in international flights, for fear travelers could reignite the outbreak.

Earlier this week in Belize, price cuts in diesel and kerosene fuel were announced and Prime Minister Dean Barrow told reporters on Wednesday that he expects the same for both regular and premium fuel as well.

On the flip side, Belize is getting substantially less revenue from the fading local industry in the west which has been shedding profits as supply dwindles and no new commercial fields are discovered. Potential deposits in the sea are effectively ruled out by a moratorium refusing any activity within a mile of the barrier reef or in marine protected areas.

 

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