Oil price dips below $20 on gloomy demand forecast

The price of oil dropped below $20 per barrel Wednesday after an Energy Information Administration report predicted a massive drop in petroleum demand because COVID-19 fears.

The price West Texas intermediate crude closed at $20.15 Wednesday on the New York Mercantile Exchange, down 57 cents on the day. The price fell as low as $19.20 before recovering slightly.

Natural gas closed at $1.59.

The Energy Information Administration's short-term report said global petroleum and liquid fuels consumption was 94.6 million barrels a day in the first quarter, down. 5.6 million from 2019. The EIA expects demand to remain down by 5.2 million barrels a day for the remainder of the year before recovering in 2021.

The forecast said inventories will grow by 3.9 million barrels a day this year. U.S. production will fall to 11.8 million barrels per day, down 500,000 from last year.

The agency expects the United States to become new oil importer again in the third quarter.

U.S. gasoline prices will average $1.58 per gallon April-September, down $1.14 from last year.