Oil prices fall as analysts see more carnage

Kuwait, which had recorded 289 cases of coronavirus until the end of March, is the first Gulf country to stop flights and to enforce partial curfew to prevent the spread of highly contagious respiratory diseases. A government source told Reuters that the sectors most affected by the epidemic are aviation, hotels, and real estate. A government spokesman said the cabinet-approved incentive program was intended to provide liquidity for small and medium-sized businesses to meet their obligations. This includes the responsibility of government agencies to pay their debts to the private sector as soon as possible. In a television interview with the central bank on Twitter, Governor Mohamed Al-Hashil said that the central bank had separately asked lenders to delay the repayment of loans to businesses hit by the crisis for three months.

Kuwait is also coping with the impact of falling oil prices on its financial resources, which is expected to result in a more significant public budget deficit this year. Kuwait announced different measures to support its economy against the Corona pandemic, including long-term loans from local banks, and the central bank asked the banks to facilitate the repayment of loans to affected businesses. The government source said that in light of falling oil prices, the adoption of the debt law that authorizes Kuwait to borrow more turns out to be a government priority. A government spokesperson has said that maintaining Kuwait’s credit rating is one of the goals of the new economic measures.

The key index price for the United States   West Texas Intermediate rose 18% this morning when new reports appeared, indicating that the US is not going to fill the storage as quickly as planned.   Storage problems have been the focus of analysts and traders in the oil markets for the past few months. The situation has become so dangerous that ships carrying crude oil worldwide are trapped at sea as storage facilities reach their maximum capacity.

Given the COVID-19 situation, it’s clear to see how any positive news can help raise oil prices.

Previous estimates of API predicted that 13,226 million oil barrels would accumulate, while the actual figure was 10,619 million barrels. In addition to the little hope inspired by the American Petroleum Institute report, OPEC, along with its global partners are expected to begin its historic joint cut in oil production in early May. Although the reduction may not be enough to offset the demand for the approximately 30 million barrels per day destroyed by current COVID-19 orders to stay at home, it is at least a step in the right direction to as the world copes with where to put all the oil that continues to flood the market.

However, despite the good news, many analysts see even more damage in the weeks to come.

According to Craig Erlam, market analyst at OANDA, this massacre will continue as long as the market remains very unbalanced, and we approach mid-May when storage facilities are to be maximized, adding that these cuts don’t arrive soon.

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