2020.01.2209:46:00UTC+00Oil Extends Losses After IEA Surplus Forecast

Oil prices fell on Wednesday to extend losses from the previous session after the International Energy Agency (IEA) said a surplus of one million barrels per day (bpd) of oil will keep a lid on prices in the first half of 2020.

Benchmark Brent crude dropped 0.65 percent to $64.17 a barrel, while U.S. crude futures were down 0.75 percent at $57.95.

"I see an abundance of energy supply in terms of oil and gas," the head of the IEA, Fatih Birol, told the Reuters Global Markets Forum on Tuesday, while attending the World Economic Forum meeting in Davos.

"It's the reason that recent incidents we have seen - with the Iranian general killed, Libya unrest - didn't boost international oil prices," Birol added.

Concerns around supply disruptions in Libya, Iran and Iraq also faded, with analysts now saying that any supply disruptions could be offset by increased output from the Organization of the Petroleum Exporting Countries (OPEC),

Goldman man Sachs said in a note that a potential drop in oil demand from top energy consumer China due to the outbreak of a new coronavirus could hurt crude prices by about $3 per barrel.

"Translating the estimated SARS demand impact into 2020 volumes points to a potential 260,000 barrels per day negative shock to global oil demand on average," Goldman said.

Inventory data from the American Petroleum Institute (API), an industry group, will be out later today, while the weekly EIA report is due on Thursday.