UPDATE 5-Oil prices sink as crippled demand outweighs stimulus hopes

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

(Recasts throughout; updates prices, market activity and
comments; changes byline and dateline, previously LONDON)
By Laila Kearney
NEW YORK, March 26 (Reuters) - Oil prices fell on Thursday
after three sessions of gains as restrictions on travel
worldwide crimped fuel demand, with U.S. crude futures plunging
about 4% after the United States scrapped plans to buy domestic
oil for its emergency reserve.
Concerns about demand also overshadowed expectations that a
$2 trillion U.S. stimulus package will bolster economic
activity.
West Texas Intermediate (WTI) crude CLc1 futures dropped
91 cents, or 3.7%, to $23.58 a barrel by 11:11 a.m. EDT (1511
GMT). Brent crude LCOc1 futures fell 11 cents to $27.28 a
barrel. Both contracts are down about 60% this year.
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.
"The SPR element is totally a domestic issue and it has been
percolating in the market for a couple weeks," said Bob Yawger,
director of futures Mizuho in New York. "There was a certain
assumption that it was going to happen so you had that backstop,
to a certain degree, that didn't exist for the international
benchmark. But just overnight, it evaporated."
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. The House is expected
to vote on Friday.
But with demand disappearing and output rising, the outlook
for oil is bleak.
Goldman Sachs forecast global oil demand, which stood at
around 100 million barrels per day (bpd) last year, will fall by
10.5 million bpd in March and 18.7 million bpd in April. For the
year, oil consumption is expected to contract by around 4.25
million bpd, the Wall Street bank said.
"Global isolation measures are leading to an unprecedented
collapse in oil demand," it said.
The weakening demand is leading oil refineries from Texas to
Thailand to reduce operating rates. The world's top oil and gas companies have cut spending by
about 20%, including majors Chevron CVX.N , Total TOTF.PA and
Royal Dutch Shell RDSa.L . 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. At the same time, 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/
http://graphics.thomsonreuters.com/testfiles/oilspill)
Oil stockpiles are already rising with tanks around the
world filling fast despite a 50%-100% jump in leasing costs.
U.S. crude inventories rose by 1.6 million barrels last
week, marking the ninth straight week of increases. Products
supplied, a proxy for U.S. demand, dropped nearly 10% to 19.4
million bpd, government data showed on Wednesday. EIA/S

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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
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