WTI oil price plunges to 20-year low
WTI oil price tumbled to their lowest level in more than two decades as the global demand hit from the coronavirus pandemic raised concerns the world is becoming awash with crude that it does not have enough room to store.
Analysts said the latest fall in prices, which came ahead of the imminent expiry of a heavily traded futures contract, could put fresh pressure on producers to further reduce supply, The FT reported.
In Asian trading on Monday, West Texas Intermediate plunged as much as 21% to $14.47 a barrel, its lowest level since 1999. It later pared some of those losses, trading down 18.6% at $14.87.
Oil prices have plummeted this year on the possibility that the coronavirus outbreak will cause a deep global recession. The number of Covid-19 infections worldwide topped 2.4m as of Monday, according to Johns Hopkins data, with more than 165,000 dead. Over the weekend, U.S. President Donald Trump sparred with state governors over plans to reopen the world’s largest economy.
The deepening fall in oil prices has come despite an Opec-backed deal to cut roughly 10% of global crude supply. Reductions of varying magnitude are planned to run until April 2022 as part of efforts to stabilise prices.
Monday’s fall was driven by the imminent expiration of the WTI futures contract for May delivery. Contracts for WTI delivery in June by comparison were down by a smaller 6.1% at $23.51.
Signs of curtailed U.S. supply have done little to boost prices. Baker Hughes data on Friday showed that the number of oil rigs in the U.S. has dropped by more than a third over the past month.
Brent crude was down 3% at $27.23 a barrel on Monday in Asia.