Low Oil Prices Could Stretch Into May, Analysts Say Following Historic Collapse – By David Brennan (Newsweek) / April 21 2020
U.S. oil prices collapsed to historic lows on Monday, reaching as low as minus $40 per barrel as traders struggled with sustained low demand and storage capacity filling up around the world.
U.S. benchmark West Texas Intermediate crude May futures fell more than 305 percent on Monday, settling at minus $37.63 per barrel down from $55.90 earlier in the day. This marked the largest fall in the commodity’s history and the first time ever that WTI futures had dropped below $0.
Elsewhere, the internal benchmark Brent crude price fell below $26 per barrel on Monday—down 8.9 percent—and continued its slide to below $20 per barrel on Tuesday morning.
Oil markets have been thrown into chaos by the COVID-19 coronavirus slowdown, which has sent demand for oil plummeting and supply ballooning. Meanwhile, the excess oil has been rapidly filling storage space around the world.
A price dispute between the Saudi-dominated OPEC cartel and Russia exacerbated the situation. Russia had been cooperating with OPEC under the OPEC+ agreement until March, when it broke with the bloc over proposed production cuts intended to boost price.
The Saudis retaliated by upping production, driving down the price of oil in the hope that Russian and its natural resource-dependent economy would sustain enough damage to force Moscow back to the table. The two sides have now agreed a historic cut in production, but this will not come into force until May.
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