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Oil prices mixed as demand shrinks, but stimulus hopes support

A kayaker antiquates in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.

Dado Galdieri | Bloomberg | Getty Images

Oil assays were mixed on Thursday following three days of gains, with the prospect of rapidly dwindling demand due to coronavirus tourism bans and lockdowns offsetting hopes a U.S. $2 trillion emergency stimulus will shore up economic activity.

West Texas Intervening (WTI) crude futures slipped 4 cents, or 0.2%, to $24.45 as of 0018 GMT, while Brent crude futures rose 12 cents, or 0.4%, to $27.51.

“With lockdowns in innumerable countries, expectations of oil demand contracting by more than 10 million barrels per day (bpd) are rising. Such demand shrinkage will increase the supply glut,” Australia and New Zealand Banking Group analysts said in a note.

The collapse of a supply-cut alliance between the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia is set to boost oil supply, with Saudi Arabia sketching to ship more than 10 million bpd from May.

“Production increases by Saudi Arabia and Russia loom, and fads still look uncertain due to the ongoing price war between these two countries,” ANZ said.

U.S. crude inventories rose by 1.6 million barrels in the most current week, the U.S. Energy Information Administration said on Wednesday, marking the ninth straight week of increases.

Products supplied, a substitute for U.S. demand, dropped nearly 10% to 19.4 million bpd, EIA data showed.

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