Oil prices slump again as US ramps up production
Oil prices fell again this morning, just days after they touched an 18-year low amid a massive slump in demand and oversupply concerns.
Brent crude sank 3.6 per cent today to hit $25.40. And West Texas Intermediate (WTI) dropped 1.3 per cent to teeter on the edge of the $20 mark, at $20.21.
Two days ago Brent crude slumped to below $24, its lowest level since 2002.
Oil prices have halved over the past month amid the global coronavirus pandemic. That has forced companies to slash production as worldwide travel bans bite.
Meanwhile, the US upped oil production by 10.5m barrels last week. That puts production well above forecasts of 4m barrels, according to the American Petroleum Institute.
“The market sentiment remains bleak as there is no clarity on how long the pandemic will continue,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities, quoted by Reuters.
A price war that erupted between Saudi Arabia and Russia earlier this month has also forced down oil prices.
That came about when Russia refused to agree to more production cuts to shore up the value of oil. The Saudis quickly chose to flood the market in response.
Saudi Arabia and other member countries of the Opec oil cartel yesterday failed to agree to an April meeting to discuss the slide in oil prices.
“It is very unlikely that Opec, with or without Russia or the United States, will agree a sufficient volumetric solution to offset oil demand losses,” BNP Paribas analyst Harry Tchilinguirian said in a report yesterday.
Oil prices booked record losses in March. And crude futures ended the first quarter of 2020 down almost 70 per cent.
A dour outlook on coronavirus did not help oil prices. US President Donald Trump has warned up to 240,000 US citizens will die from Covid-19.
He has already extended a lockdown in the US to the end of April. The President had hoped to restart the US economy by Easter.
More than 860,000 people around the world have contracted coronavirus. And the global death toll has now topped 42,000.