Oil fell by over 4% towards $28 a barrel, pressured by reports of persistent oversupply and collapsing demand due to global coronavirus-related lockdowns and a lack of coordinated oil purchases for strategic storage.
The International Energy Agency (IEA) today forecast a 29 million barrel per day (bpd) dive in April oil demand to levels not seen in 25 years and said no output cut could fully offset the near-term falls facing the market.
Brent crude fell $1.29, or 4.4%, to $28.31 a barrel this afternoon, giving up earlier gains. US West Texas Intermediate crude CLc1 slid 38 cents, or 1.9%, to $19.73.
"There is no feasible agreement that could cut supply by enough to offset such near-term demand losses," the IEA said in its monthly report. "However, the past week's achievements are a solid start."
Crude prices have tumbled this year, hitting an 18-year low of $21.65 a barrel on March 30. The drop in prices and demand has pushed global producers to agree unprecedented supply cuts.
The Organization of the Petroleum Exporting Countries (OPEC), along with Russia and other producer - a grouping known as OPEC+ - has partnered with other oil-pumping nations, such as the US, in the record global supply pact.
Officials and sources from OPEC+ states indicated the IEA, the energy watchdog for the world's most industrialised nations, could announce purchases of oil for storage of up to several million barrels to buoy the deal.
But as of today, no such IEA purchases had materialised. The agency, in its report, said it was "still waiting for more details on some planned production cuts and proposals to use strategic storage."
The US, India, China and South Korea have either offered or are considering such purchases, the IEA added.
Some analysts said they expect more downward pressure on the market without a demand recovery.
The IEA report added to downward pressure caused by rising inventories.
Industry group the American Petroleum Institute said yesterday that US crude inventories increased by a bigger than expected 13.1 million barrels in the week to April 10.