After a brief respite following reports of central bank economic stimuli in the United States and the UK, crude oil slumped once again after on Wednesday, President Donald Trump instituted a 30-day travel ban on most European countries because of the coronavirus pandemic.
At the time of writing Brent crude was trading down by more than 8 percent at $32.71 a barrel, with West Texas Intermediate at $30.27 a barrel, also down by more than 8 percent.
In a televised address from the Oval Office, Trump said, “We will be suspending all travel from Europe to the United States for the next 30 days. The new rules will go into effect Friday at midnight. These restrictions will be adjusted subject to conditions on the ground. There will be exemptions for Americans who have undergone appropriate screenings. And these prohibitions will not only apply to the tremendous amount of trade and cargo, but various other things as we get approval.”
Airline stocks slumped further on the news, as the ban is another blow to an already battered industry, but fuel demand from one of the biggest consumers globally will also be affected further, which, along with the panic associated with such radical disease containment measures, added to the already sizeable pressure on oil prices.
The Energy Information Administration’s latest Short-Term Energy Outlook, also released yesterday, did not help lift industry spirits, either. The EIA said it expected oil consumption to have declined by 900,000 bpd in the current quarter from a year earlier, and for full-2020, demand for oil would rise by a modest 400,000 bpd.
The authority also revised down its price forecast, now expecting Brent crude to average $43 a barrel this year, but just $37 a barrel during the second quarter as the disease, which the WHO has now classified as a pandemic, continues to rage across the world.