Crude oil tumbles below $20 per barrel — lowest since 2002

Crude oil tumbles below $20 per barrel -- lowest since 2002

World oil benchmark Brent crude plunged to its least expensive degree in virtually 18 years on Monday and U.S. crude briefly tumbled beneath $20 a barrel as buyers confronted the rising prospect that the worldwide coronavirus shutdown may final for months, additional squeezing demand for gasoline.

The pandemic is anticipated to trigger at the very least a 20% drop in gasoline demand worldwide as governments take steps to limit the unfold of the virus. With Saudi Arabia and Russia set to flood the market with oil subsequent month, producers and shippers have additionally been scrambling to lock oil up in storage as demand falls.

Brent futures fell $2.17, or 8.7%, to settle at $22.76 a barrel, the bottom shut since November 2002, whereas U.S. West Texas Intermediate (WTI) crude fell $1.42, or 6.6%, to $20.09, the bottom shut since February 2002.

World commodities dealer Trafigura stated oil demand may fall by greater than 30 million barrels per day (bpd) in April, practically one-third of every day gasoline consumption.

The value struggle between Saudi Arabia and Russia erupted earlier this month after the collapse of a three-year deal to restrict provide between the Group of the Petroleum Exporting Nations (OPEC) and different producers led by Moscow.

Up to now, negotiations between the 2 producers and the USA haven’t modified the outlook. Saudi Arabia stated on Monday it deliberate to spice up oil exports to 10.6 million barrels per day (bpd) from Might.

Main crude benchmarks have recorded losses for 5 straight weeks. The value of oil is now so low that it’s changing into unprofitable for a lot of oil corporations to stay lively, analysts stated, and higher-cost producers can have no alternative however to close manufacturing, particularly since storage capability is nearly full.

Texas shale producers, Pioneer Pure Assets and Parsley Power formally requested Texas regulators on Monday to curtail oil manufacturing for the primary time in practically 50 years.

Declining demand and swiftly filling storage have squeezed costs for main U.S. grades of crude – some to round $11 a barrel. [CRU/C]

“It seems that the Saudis are on a mission to drive marginal U.S. producers off of the taking part in discipline in re-capturing market share,” stated Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

U.S. President Donald Trump and Russian President Vladimir Putin agreed throughout a telephone name to have their prime vitality officers meet to debate slumping international oil markets.

The market added to earlier losses after merchants stated Genscape reported that U.S. stockpiles on the key Cushing storage hub in Oklahoma rose greater than Four million barrels final week, which was the biggest-one week improve in additional than 10 years.

Financial institution of America lowered its oil worth forecasts for the second time in two weeks after the financial institution’s economists projected international GDP would contract within the first half of 2020.

“On a quarterly foundation, we count on to see the steepest decline in international oil consumption ever recorded,” BofA analysts stated, reflecting a 12 million-bpd drop within the second quarter of 2020 and a 4.5 million-bpd contraction for the yr.

BofA diminished its 2020 worth forecasts to $37 per barrel for Brent and $32 for WTI and stated it anticipated each benchmarks would commerce within the teenagers in coming weeks.

Supertanker freight charges are rising for a second time this month as merchants rush to safe ships for storage.

Goldman Sachs analysts stated demand from commuters and airways, which account for about 16 million bpd of worldwide consumption, might by no means return to earlier ranges.

Additionally learn: US crude oil futures climb $1 as greenback index weakens

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