U.S. oil prices dived to 22-year lows at just 11 U.S. dollars Monday after crashing almost 40 percent in a market flooded with crude and slammed by evaporating demand in the face of the coronavirus pandemic.
Just before 1200 GMT, the U.S. benchmark West Texas Intermediate (WTI) crude for May delivery tanked to 11.04 U.S. dollars – the lowest level since 1998.
Trade, however, was also technically driven as investors closed out their positions ahead of the May contract expiry Monday. The June contract was down 11.9 percent at 22.06 U.S. dollars.
“The real problem of the global supply-demand imbalance has started to really manifest itself in prices,” said Rystad Energy analyst Bjornar Tonhaugen.
“As production continues relatively unscathed, storage is filling up by the day. The world is using less and less oil and producers now feel how this translates in prices.”
The European benchmark contract, London Brent North Sea oil for June delivery, was down 6.1 percent at 26.38 U.S. dollars per barrel.
Signs that the coronavirus may have peaked in Europe and the United States failed to lift Asian and European financial markets generally.
Traders are instead becoming more and more concerned that oil storage facilities are reaching their limits, as stockpiles continue to build owing to the crash in demand caused by the COVID-19 pandemic.
Analysts said this month’s agreement between OPEC and its peers to slash output by 10 million barrels a day was having little impact because of the virus lockdowns and travel restrictions that are keeping billions of people at home.