Oil Price Falls after Saudi Aramco Asked to Raise Output Capacity

Brent crude slid $0.41, or 1.1%, to $36.81 a barrel by 0740 GMT, while U.S. West Texas Intermediate (WTI) crude dropped $0.42, or 1.2%, to $33.94 a barrel.

Saudi Aramco Chief Executive Amin Nasser said the state-run oil giant had been asked by the Ministry of Energy to boost its production capacity to 13 million barrels per day (bpd) from 12 million bpd now.

Saudi has been pumping around 9.7 million bpd in the past few months, but has extra capacity it can turn on and has hundreds of millions of barrels of crude in storage.

U.S. crude oil inventories rose in the most recent week, while gasoline and distillate stocks dropped, data from industry group the American Petroleum Institute showed.

Meanwhile, worries about the economic fallout from the coronavirus outbreak and its impact on energy demand continued to pressure oil prices.

Policymakers and central banks have been taking measures to bolster their economies against disruption caused by the virus outbreak, the latest being the Bank of England that unexpectedly cut interest rates by half a percent on Wednesday.

“I think we are looking at $30 levels (in Brent) and I would not be surprised in some day to see prices lower than $30.”

The flu-like coronavirus, which can be transmitted from person to person, originated in China late last year and has spread to more than 60 countries since then. It has infected over 100,000 people and killed more than 4,000 globally.

REUTERS