Oil Prices Hit 1990s Low

Aaron Sheldrick
Wednesday, April 22, 2020

Oil prices slumped again on Wednesday, with Brent falling to the lowest since 1999, as the market struggled with a massive crude glut amid a collapse in demand for everything from gasoline to jet fuel caused by the coronavirus outbreak.

Brent crude, which fell 24% in the previous session, touched $15.98 a barrel, its lowest since June 1999. It was trading down $2.37, or 12%, at $16.96 at 0511 GMT.

West Texas Intermediate was down 51 cents, or 4.4%, at $11.06 a barrel.

The falls follow two of the wildest days in the history of oil trading, as worldwide supply looks set to overwhelm demand for months to come and current production cuts fall far short of offsetting that glut.

The front-month U.S. contract fell into negative territory for the first time in history on Monday and set a record for the number of contracts traded on Tuesday.

Oil prices have slumped by around 80% this year as the pandemic has spread across the world, killing almost 180,000 people, routing financial markets and leading to what could be the worst economic meltdown since the depression of the 1930s.

The viral outbreak has caused fuel demand to drop by roughly 30% worldwide and energy companies in the United States, the world's biggest producer, are scrambling to find storage for excess oil. "This is a direct result of excessive investment coinciding with a sudden demand shock in a landlocked area with limited storage and transportation," Goldman Sachs said in a report.

The volatility in the oil market has prompted CME Group, the world's biggest commodities exchange, to raise margins on crude oil futures.

The U.S. Senate on Tuesday approved nearly $500 billion in added support for the U.S. economy and hospitals and will send the measure to the House of Representatives for final passage later this week.

But there is concern globally that no amount of pump priming will be enough, with business executives preparing for a prolonged slump in demand and many of them worried that their companies won't survive.

U.S. crude inventories rose by 13.2 million barrels in the week to April 17 to 500 million barrels, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a build of 13.1 million barrels.

Official government data is due to be released on Wednesday.

"The U.S. oil system has been shattered by ... demand destruction never seen before," said Matt Stanley, a fuel broker at Star Fuels in Dubai.

The United States House of Representatives is set to vote on what would be the fourth coronavirus-response law. Taken together, the four measures amount to about $3 trillion in aid since last month to confront a crisis that has killed nearly 45,000 Americans.

(Reporting by Aaron Sheldrick; editing by Richard Pullin and Louise Heavens)

Categories: Energy Activity Oil Production Oil Price

Related Stories

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside Agrees Long-Term LNG Supply with Petronas Unit

Yinson Production Closes $1B Investment to Drive Further Growth

Chuditch Gas Field Drilling Ops Get Delayed to Next Year

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

Woodside to Shed Some Trinidad and Tobago Assets for $206M

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

Current News

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com