UPDATE 7-Oil sheds more than $1 as weakening demand outweighs stimulus hopes


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    * U.S. Department of Energy ditches plans to buy oil for
    * IEA head says global demand could drop 20%
    * Swelling supplies and inventories weigh
    * Losses capped as U.S. Senate passes $2 trillion stimulus 
    * April oil demand to fall by 18.7 mln bpd -Goldman
    * GRAPHIC: Global Oil Slump: https://reut.rs/39ieums

 (New throughout, updates prices, market activity, comments to
    By Laila Kearney
    NEW YORK, March 26 (Reuters) - Oil prices dropped more than
$1 a barrel on Thursday as a growing number of virus-related
restrictions on travel slashed global fuel demand, overshadowing
expectations that a $2 trillion U.S. stimulus package will
bolster economic activity.
    The head of the International Energy Agency said worldwide
oil demand could drop as much as 20 million barrels per day, or
20% of total demand, as 3 billion people are currently under
stay-at-home orders due to the novel coronavirus outbreak.
    West Texas Intermediate (WTI) crude  CLc1  futures settled
at $22.60 a barrel, falling $1.89, or 7.7%. Brent crude  LCOc1 
futures settled at $26.34 a barrel, shedding $1.05, or 3.8%.
Both contracts are down about 60% this year.
    The twin shocks of the coronavirus pandemic and the supply
surge from Saudi Arabia and Russia after the two nations failed
to come to an agreement to limit supply has roiled crude
markets, which have lost about half their value in March.
    "With demand down 20% or more globally, it's two Saudi
Arabias-worth of production that would need to be cut out to try
to even attempt to balance this market," said John Kilduff, a
partner at Again Capital in New York. 
    U.S. futures were notably weaker than international
benchmark Brent crude. The U.S. Department of Energy scrapped a
plan to purchase domestic crude oil for its Strategic Petroleum
Reserve (SPR) after funding was not included in the broader
stimulus package.  urn:newsml:reuters.com:*:nL1N2BJ16D
    "There was a certain assumption that it was going to happen
so you had that backstop, to a certain degree, (for WTI) that
didn't exist for the international benchmark," said Bob Yawger,
director of futures Mizuho in New York. 
    The U.S. Senate unanimously passed the $2 trillion bill
aimed at helping struggling workers and industries hurt by the
impact of the coronavirus epidemic, and sent the legislation to
the House of Representatives.  urn:newsml:reuters.com:*:nL1N2BJ15W The House is expected
to vote on Friday.
    The passage did little to ease investors' frayed nerves.
    "Oil is dead," Gary Ross, founder of BlackGold Investors,
wrote on Twitter. "International and domestic market seized up
on too much oil. Sorry to say heading to single digits!"
    The collapse of a supply-cut pact between the Organization
of the Petroleum Exporting Countries and other producers led by
Russia, known as OPEC+, is set to boost oil supply, with Saudi
Arabia planning to ship more than 10 million bpd from May.
(GRAPHIC: Global oil slump: https://reut.rs/39ieums/)
    The twin shocks are rippling through the oil industry. The
world's top oil and gas companies have cut spending by about
20%, while oil refineries are cutting operating rates due to
slack demand.  urn:newsml:reuters.com:*:nL8N2BI4DL  urn:newsml:reuters.com:*:nL4N2BI2Y1
    Brazil's Petrobras said it was dialling back short-term
production by 100,000 bpd, delaying a dividend payment and
trimming its 2020 investment plan. urn:newsml:reuters.com:*:nL1N2BJ0GG

Brent vs. WTI crude prices    https://tmsnrt.rs/2M55YzY
Brent crude futures vs. FTSE    https://tmsnrt.rs/304CZDY
GRAPHIC: Global Oil Slump    https://reut.rs/39ieums
Oil Majors' 2020 capex cuts png    https://reut.rs/2WIDMre
 (Additional reporting by Ron Busso in London, Roslan Khasawneh
in Singapore and Sonali Paul in Melbourne; Editing by Marguerita
Choy, Susan Fenton and Cynthia Osterman)
 ((Laila.kearney@thomsonreuters.com; (917) 809-0054;))

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