By Barani Krishnan

Investing.com – The worst year in the history of oil trading is ending with a loss of more than 20% for crude prices as the best efforts of producers to cut output still fell short of mitigating the demand destruction caused by the coronavirus pandemic.

“Should 2020 be forgotten and never brought to mind?” Price Futures Group oil analyst Phil Flynn asked in his final note for the year.  

“The year of Covid saw the global economy grind to a halt because the Covid-19 virus causes the biggest drop in global economic output since the days of the Great Depression. For oil, we saw demand drop over 8%, the biggest percentage demand drop year-over-year in history that caused billions of dollars in energy investment write-downs. as well as a wave of bankruptcies.”

New York-traded , the key indicator for U.S. crude, settled 2020 trading at $48.52 per barrel, down 12 cents, or 0.2%, for the day. For the year, it was off $12.54, or 21%. 

WTI opened 2020 at $61.06 and reached $65.65 by the first week of January. What no one knew then was the epic crash that was to follow in April, that would send the U.S. crude benchmark to as low as minus $40 — the first ever negative pricing in oil’s history that forced those who owned crude to pay people to get the barrels off their hands.

London-traded , the global benchmark for crude, officially finished 2020 at $51.80, up 46 cents, or 0.9 for the session.

Brent settled 2019 at $66 and hit a 2010 high of  $71.75 by January, before plummeting to $15.98 in April. It ended the year down $14.20, or 22%. 

After rallying for seven straight weeks from November on optimism over Covid-19 vaccine breakthroughs and roll-out, oil is ending the year in a trading range that capped WTI at $48 and Brent at $52 on concerns that immunization from the virus might now take a lot longer than thought.

While the rebound from crude’s lows itself was spectacular with the grit shown by producers to cut output, demand for oil in the new year is far from assured.

Despite that, come Jan. 4, the Organization of the Petroleum Exporting Countries and its allies will meet to consider raising global production of crude by half a million per day for the second time in a month. 

When the 13-member Saudi-led OPEC and its 10 allies led by Russia hiked output by 500,000 barrels per day the first time in December, the market actually lauded the group’s discipline for adding less than the 1.0-2.0 million bpd forecast. Crude prices actually rose after the OPEC maneuver. 

This time around, the market might not be as kind. 

To add to the consternation of traders: The request is coming from Russia, which was responsible for escalating the price crash in April by insisting on raising production just as Covid-19 lockdowns were gathering pace across the world.