Monday, April 20, 2020 / 11:18 AM / By Michael Kern of Oilprice.com / Header Image Credit: Oilprice
Brent Crude hits $26.45pb while WTI hits $11.65pb as at 8:33am (EDT). This represents -5.80% and -36.23% losses respectively from the previous prices $28.08pb and $18.27pb.
A gruesome combination of crumbling demand for crude and global storage filled to its brim has pushed oil prices to levels not seen in over two decades.
U.S. benchmark, West Texas Intermediate, has fallen to the $15 range as global economies remain on lockdown due to the COVID-19 pandemic, crushing crude demand. To add insult to injury, global oil storage is reaching its limits. The situation is so dire, in fact, that the Department of Energy is even considering paying domestic oil producers to keep crude in the ground.
Just. this Wednesday, the International Energy Agency reported a record 19 million barrel increase in domestic crude oil supplies.
Vandana Hari, founder of Vanda Insights, a firm specializing in oil market analysis, , "The current prices show that the OPEC+ cuts proved to be a blip, with oil prices at the mercy of the virus once again," adding that "Until we approach a lifting of the lockdowns in the U.S., oil may drift lower or remain rangebound around current levels."
The oil price collapse is sending shockwaves throughout the entire
industry, with oil majors slashing spending across the board, and explorers
cutting as much as 13 percent of their drilling fleet as the crisis rages on.
The troubling times have even , mandate a state-wide production cut. While the three commissioners were unable to come to a decision last Tuesday, the group is set to meet again on April 21st. And with oil prices having fallen an addition 20 percent since their last meeting, they might just be ready to take action.
Even if the RRC follows through with their plan to interfere with the free markets, however, many experts suggest that as much as 20-30 million barrels per day in demand is being decimated by COVID-19 - a far cry from what global oil producers have cut so far.