The U.S. Energy Information Administration (EIA) on Tuesday forecast that the worldwide COVID-19 pandemic and increase of oil supply will keep global crude oil prices at multi-year low averages through the first half of 2020.

In its April Short-Term Energy Outlook, the EIA expected that considerable decreases in liquid fuel consumption will result from containment measures and economic disruptions related to COVID-19, which will affect U.S. refinery activity and, consequently, demand for crude oil.

At the same time, the EIA said crude oil supply will increase in the short term as a result of the suspended production cuts agreement among the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia.

As a result, the EIA assumed that these two factors will keep global crude oil prices at multi-year low averages through the first half of 2020. Only gradual increases in crude oil prices are expected through all of 2020 as these factors persist, which could lead to record levels of expected global oil inventory builds in the first half of 2020.

Oil prices plunged to multi-year lows after the OPEC+ failed to agree on new output cuts in Vienna last month, partly leading to a collapse in the global financial market. The OPEC+ are expected to hold a video conference on Thursday to discuss oil output cuts. 

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