Oil prices were down on Wednesday due to lingering concerns over global demand, which is exerting pressure on prices as the number of coronavirus cases continues to rise.
International benchmark Brent crude was trading at $42.23 per barrel at 0631 GMT for a 0.52% decrease after closing Tuesday at $42.45 a barrel.
American benchmark West Texas Intermediate (WTI) was at $39.97 a barrel at the same time for a 0.57% decrease after ending the previous session at $40.20 per barrel.
Oil prices are still under pressure due to weak global oil demand concerns caused by the increasing number of coronavirus cases.
The number of COVID-19 cases worldwide is now over 38 million, according to the latest data from Johns Hopkins University.
While the US still tops the number of cases above 7.8 million as of Wednesday morning, India’s cases now total over 7.2 million, and Brazil follows with over 5.1 million cases.
In its monthly report, OPEC projected that global oil demand would fall by 9.47 million barrels per day (bpd) year-on-year to 90.29 million bpd in 2020. However, for 2021 global oil demand is estimated to increase by 6.54 million bpd, or 7.25%, to average 96.84 million bpd.
OPEC said COVID-19’s unchanged uncertainties and negative impacts over the contact-intensive sub-sectors of travel and transportation, tourism, hospitality and leisure would most likely continue in 2021.
Assuming that a widely distributable vaccination will only be available by the second half of 2021, OPEC said the global economy is forecast to remain in transition while some oil-demand sensitive sectors would continue facing a challenging period next year.
The price declines were also supported as the International Monetary Fund (IMF) estimated that average annual oil prices would be $41.7 a barrel in 2020 - a decrease of 32% from the 2019 average - and $46.7 a barrel in 2021. The organization highlighted the elevated uncertainty prevailing in the oil market, as the COVID-19 pandemic is not yet under control.
The global rating agency Fitch Ratings also estimated that the recovery in global airline traffic would be further delayed due to ongoing outbreaks associated with the coronavirus pandemic and patchwork travel restrictions.
Further feeding weak demand concerns, Fitch said 2021 traffic would be down by more than 30% from the level in 2019, which will take until 2024 to reach again globally.
By Sibel Morrow