The market needs to see additional cuts to account for massive decline in demand for oil
New York/Hong Kong, April 21 (ANI): Oil prices continued to crash on Tuesday after a stunning collapse a day earlier that saw US crude futures plunge below zero for the first time in history as reports said the United States could run out of storage for a glut caused by the coronavirus lockdown.
Global benchmark Brent crude also fell sharply in response to the collapse of demand following reduced economic activity. US oil futures for May delivery were last trading below zero dollar a barrel again after briefly rising above one dollar a barrel.
The May contract which expires later today finished regular trading Monday at minus 37.63 dollars a barrel. The West Texas Intermediate June contract, which was traded more actively, crashed more than 11 per cent to 18.14 dollars a barrel.
Brent, the global benchmark, also plummeted nearly 22 per cent, last trading at 19.92 dollars a barrel. According to CNN, the coronavirus pandemic has caused oil demand to evaporate so rapidly that the world is running out of room to store barrels that nobody wants.
A new agreement about a week ago by Saudi Arabia and Russia along with other producers to cut supply by a record amount has failed to convince traders that the supply glut will ease any time soon.
The market will likely continue to be pressured in the coming weeks, CNN reported quoting a research note by Bjornar Tonhaugen, Head of Oil Markets at Rystad Energy. He noted that the OPEC+ cuts only go into effect in May.
And while the group has agreed to cut oil production by historic amounts, Tonhaugen said the market needs to see a lot of additional cuts to account for a massive decline in demand for oil.(ANI)Â
