Oil prices collapsed to more than two-decade lows Monday as traders grow concerned that storage facilities are reaching their limits, while signs that the coronavirus may have peaked in Europe and the United States were unable to help Asian equities extend their recent advances.
US crude benchmark West Texas Intermediate briefly plunged almost 20 percent to below $14.50 — 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, with Trifecta Consultants analyst Sukrit Vijayakar saying refineries were not processing crude fast enough.
There are also plenty of supplies from the Middle East with no buyers as “freight costs are high”, he told AFP.
“I think we will see a test of the 1998 lows at $11 sooner rather than later,” OANDA senior market analyst Jeffrey Halley told AFP.
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.”
Stock markets were mostly lower despite governments starting to consider how and when to ease lockdowns that have crippled the global economy.
Italy, Spain, France and Britain reported drops in daily death tolls and slowing infection rates, while Germany began allowing some shops to reopen and Norway restarted nurseries.