Petrobras Oil Prices Close Lower This Tuesday (4)

Petrobras Oil For March Closed Down 1.00%, at US$ 49.61 Per Barrel, on the New York Mercantile Exchange (Nymex), and Brent For April Fell 0.90%, at US$ 53.96 Per Barrel, on the Intercontinental Exchange (ICE)

Futures contracts for oil closed again down after a slight recovery on Tuesday, the 4th, reflecting fears for demand for the commodity due to the coronavirus in China and its impacts on the global economy, as well as the oversupply that is now becoming more evident.

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The Epidemic Affecting Petrobras

The coronavirus epidemic continues to be the factor with the greatest impact on prices, with cancellations of trips and closure of Chinese cities to contain the virus, which has already reached 25 nations. According to the World Health Organization, the risk of disease spread remains high.

For Commerzbank, there is increasing pressure on the Organization of the Petroleum Exporting Countries and allies (Opec+) to expand production cuts, as the Brent curve shows that the spot price is lower than the future price, indicating an oversupply in the short term.

Futures Contracts Involving Petrobras

Futures contracts for oil even attempted a recovery after Dow Jones Newswires reported that Opec+ is considering more aggressive responses in production cuts. However, the price began to fall after reports that an Iraqi official stated that the decision will actually be made next week.

ING assesses, in a report sent to clients, that although it seems increasingly likely that Opec+ will be forced to act, the big question is whether they would be able to significantly reduce their production further.

“An additional cut of 500,000 barrels per day may be possible, but anything beyond that would be difficult to achieve, as it becomes questionable who would be able to make significant cuts beyond Saudi Arabia and Russia. The Saudis are already complying with the current agreement at the limit. Therefore, if demand losses at the current scale persist into the second quarter, we will likely see even weaker prices,” says ING. The weekly survey of the American Petroleum Institute (API) on oil and fuel stocks in the U.S. is also on the radar, which will be released later on Tuesday.