Oil prices fall as bleak demand outlook weighs on market sentiment

Oil prices fell on Tuesday as concerns about lagging fuel demand recovery were raised by major oil producers. Still, short-covering ahead of the OPEC+ meeting put a cap on losses.

Brent crude slid 0.1%, or 5 cents, at $39.59 per barrel. U.S. West Texas Intermediate crude futures were down 0.1%, or 3 cents, at $37.23 per barrel. Both contracts closed lower in the last session.

Major oil industry producers and investors are predicting a gloomy future for fuel demand due to the coronavirus’ impact on the global economy. OPEC has revised its oil demand forecast, while BP said that demand might have peaked in 2019.

Global oil demand will fall by 9.46 million bpd in 2020, significantly bigger than last month’s forecast of a 9.06-million-bpd decline, according to OPEC’s monthly report.

Investors are waiting for OPEC’s joint ministerial monitoring committee on Thursday to assess the need for further output cuts. However, analysts are not expecting additional cuts despite Brent prices sliding below $40 per barrel.

Worries over supply disruptions in the U.S. gulf due to an impending storm also supported prices. On Monday, oil companies, ports, and refiners rushed to shut down operations as Hurricane Sally grew stronger.