Coronavirus outbreak: USA crude oil hits 18-year low as lockdowns spread

Andrew Cummings
March 19, 2020

Responding to the collapse in global oil prices, World Oil on Tuesday, March 17, launched a survey of its US readers, to gauge the appetite for substantial USA federal government action to counteract the predatory oil dumping actions of Russian Federation and Saudi Arabia.

USA crude prices plunged to their lowest levels in 18 years on Wednesday, as governments tightened travel restrictions across the world and the continuing Saudi-Russian price war showed no signs of abating.

Oil prices fell sharply on Wednesday as worries over weaker demand coupled with price-war fears gripped market participants.

Elsewhere, Iraq's oil minister pleaded for an emergency meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to discuss immediate action to support the market.

Earlier in the day, the price of WTI crude, one of several major benchmarks in oil prices, collapsed to $25.08 per barrel, its lowest indicator since November 2002.

USA crude was down 2 cents at $26.93 a barrel, after falling to as low as $26.20, also the lowest in four years.

The slide in oil prices is already punishing high-cost producers in the USA shale patch and is one factor pushing the world economy toward recession, analysts say. Even with the USA buying up oil to top up its strategic reserves, the price has continued to fall. The bank said it expects West Texas Intermediate to trade higher than Brent this quarter, and cut its Brent forecast for the second quarter to $20 a barrel. Saudi Arabia plans to ship a record 10 million barrels a day in April.

With activity in some key sectors grinding to a halt in parts of Europe and the authorities try to contain the pandemic, traders expect metals demand to slide. Traders believe the increased activity from Saudi Arabia will limit US exports in coming weeks, and they anticipate storage filling rapidly as well as refiners cut runs, boxing in USA producers. Rystad Energy offered an even more pessimistic outlook, predicting in what it called a "shock revision" that demand will fall by 2.8 percent - a scale not seen since 1980-1982 as markets recovered from the 1973 and 1979 oil crises.

While policymakers around the world take unprecedented steps to shore up their economies from the fallout of the virus, the meltdown in crude demand and concurrent supply free-for-all by the world's biggest producers continue to pull prices down. That's how fast the oil market expectations change nowadays.

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