Global oil prices collapse anew

Published April 20, 2020, 12:00 AM

by manilabulletin_admin

HONG KONG (AFP) – Oil prices collapsed to more than two-decade lows Monday as traders grow concerned that storage facilities are reaching their limits, while equities were mixed, with some support coming from signs that the coronavirus may have peaked in Europe and the United States.

US crude benchmark West Texas Intermediate briefly plunged almost 20 percent to below $15 – its lowest since 1999 – as stockpiles continue to build owing to a crash in demand caused by the COVID-19 pandemic.

Analysts said this month’s agreement between top producers to slash output by 10 million barrels a day was having little impact on the oil crisis because of lockdowns and travel restrictions that are keeping billions of people at home.

WTI was hit particularly hard as its main US storage facilities in Cushing, Oklahoma, were filling up.
ANZ said ”crude oil prices remained under pressure, as projections of weaker demand weigh on sentiment”.

”Despite the OPEC+ alliance agreeing to an unprecedented cut in output, the physical market is awash with oil,” it said, referring to the Organization of the Petroleum Exporting Countries and non-OPEC partners.

And AxiCorp’s Stephen Innes added: ”It’s a dump at all cost as no one… wants delivery of oil, with Cushing storage facilities filling by the minute.

”It hasn’t taken long for the market to recognise that the OPEC+ deal will not, in its present form, be enough to balance oil markets.”

Oil markets have plunged to near two-decade lows in recent weeks as lockdowns and travel restrictions around the globe batter demand for the commodity.

The crisis was compounded after Saudi Arabia, kingpin of exporting group OPEC, launched a price war with non-OPEC member Russia.

They drew a line under their dispute earlier this month when they and other countries agreed to cut output by almost 10 million barrels a day to boost virus-hit markets.

But prices have continued to fall heavily, with analysts saying the cuts will not be enough to make up for massive falls in demand caused by the pandemic.

”Crude oil prices remained under pressure, as projections of weaker demand weigh on sentiment,” ANZ Bank said in a note.

”Despite the OPEC+ alliance agreeing to an unprecedented cut in output, the physical market is awash with oil,” it said referring to the Organization of the Petroleum Exporting Countries and non-OPEC partners.

”Concern continues to mount that storage facilities in the US will run out of capacity,” the bank added.

The US Energy Information Administration said crude inventories in the world’s biggest economy rose by 19.25 million barrels last week, adding to the woes of the oversupplied world market, where demand has been hammered by the coronavirus pandemic.

 
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