Oil futures traded near its lowest point in 20 years with the price drop expected to continue, fuelled by a poor petroleum demand outlook tied to COVID-19 spread and a price showdown between two of the biggest crude producers in the world.

West Texas Intermediate crude contract, the U.S. standard, shed $6.58, or over 25 percent, to settle for the lowest finish since February 20, 2002 at $20.37 a barrel on the New York Mercantile Exchange. Brent oil, an international standard, closed on Wednesday at $26.01, down about 9 percent.

During the course of the year, an oil price battle between Saudi Arabia and Russia would most likely escalate, Energy analysts told CNBC, with no end in sight until the earliest 2021.

Strategic Energy & Economic Analysis director Michael Lynch said the most recent low was around $18 per barrel on an inflation-adjusted the basis for West Texas Intermediate oil, and "we might try that now, as long as neither Russia nor Saudi Arabia blinks." Lynch added that the the situation on the global oil market is "the worst" he has ever witnessed.

Export demand has been affected by a surge of canceled airline and cruise ship voyages. The outbreak also triggered a global price war between OPEC and its allies as they were unable to agree on further cuts to supply.

Both Saudi Arabia and Russia plan to boost production as early as April. Over the past week and a half, the Saudi Arabian authorities released a statement almost daily raising the stakes in their price war with Russia. The Kingdom said earlier this month it will raise production from about 9.7 million barrels a day to 12.3 million barrels.

Saudi Arabia's state-owned oil giant Saudi Aramco announced earlier this week that it would likely proceed with a planned oil production hike from April to May, indicating it was "very delighted" with an oil price of $30 a barrel.

Aramco plans to ramp up its production to 12.4 million barrels per the day starting April, with the United Arab Emirates also pledging to increase output from next month.

Meanwhile, Rystad Energy sees a year-on-year decline of 2.8 percent, or 2.8 million barrels per day, to 97.1 million barrels per day this year in global oil demand. In In 2019, the market for oil stood at around 99.9 million barrels per day. 

Bank of America analysts cautioned Wednesday that an OPEC+ increase in supply and declining demand for oil had escalated worries about a surplus that could overwhelm global storage.