Prices of oil dipped to their lowest levels in 18 years late Monday -- below $20 per barrel -- as the coronavirus pandemic continues to cripple global oil demand with no signs of Saudi Arabia backing its expected increase in production.
This year oil prices have plunged as production has sprung and demand has plunged. Only this month, they are down more than 50 percent. They took a new cutdown Monday, with crude futures of West Texas Intermediate briefly dipping below $20. Texas oil had last settled under $20 in 2002.
US crude plummeted almost 7 percent and ended at an 18-year low of US$ 20.09 per barrel, as the global health crisis continues to clobber demand for the commodity.
In after-hours trading lows, oil reached a US$ 19.27 per barrel - the worst intraday closing since February 2002. Brent crude, the globe's benchmark, dipped as much as 13 percent and dropped to a barrel of as low as US$ 21.65, its lowest point in 18 years.
Analysts and market participants are currently expecting an oil demand crash of about 20 million barrels per day in April, but it's making everybody ponder on how long lockdowns and travel restrictions would stay in place, so the oil demand toll may be higher.
Though demand is plummeting, there are no signs that Saudi Arabia - the world's biggest oil exporter and the top producer and leader of OPEC - will be back from the oil price war that started earlier this month.
The Kingdom continues to signal an aggressive boom in supply in the midst of severely depressed global demand, with another announcement to roil the market on Monday.
But a new aspect is at stake, too. Some refiners are slowing down their crude processing as demand and prices are dropping for refined products like gasoline. That causes a trickle-down effect which also hurts pipelines and producers.
In contrast, the renewed selling in the oil patch underlines the ongoing fall in demand caused by the limits on social distancing imposed by governments around the world. Routes are clean. They are closing down whole airlines. Large and small factories have halted production.
According to Bank of America, global oil consumption is likely to plunge by 12 million barrels per day this quarter, the steepest decline ever reported.
With around 3 billion people in lockdown around the world, global oil requirements could drop by 20 percent, International Energy Agency head Fatih Birol said, citing a report by Reuters.
