Oil prices drop amid supply glut, fears of second coronavirus wave
11 May, 2020
Oil prices slid almost US$1 a good barrel on Monday seeing as concern over a good persistent glut and economic gloom due to the coronavirus pandemic combined to block out support from supply cuts at some of the world’s top producers.
Brent crude futures LCOc1 were downwards 73 cents, or 2.4 percent, at $30.24 a barrel by 0114 GMT, while US West Texas Intermediate crude futures CLc1 fell 81 cents, or 3.3 percent, to $23.93 a barrel.
Both benchmarks have notched gains in the last fourteen days as countries have eased organization and social lockdowns imposed to handle the coronavirus and fuel demand has rebounded modestly. Oil production worldwide can be declining.
But possible signs of another wave of coronavirus infections in northeast China and South Korea worried investors even as more countries began to pivot towards easing pandemic restrictions in movements that could support oil demand.
“They’ve removed a number of the lockdowns but does which means that the worse has ended for now?” explained Tony Nunan, a senior risk manager at Mitsubishi Corp in Tokyo.
Global oil demand has plummeted by about thirty percent as the coronavirus pandemic curtailed movement around the world, accumulating inventories globally.
“Oil companies are working with various challenges due to the sudden decline popular,” GlobalData coal and oil analyst Haseeb Ahmed said in a note.
“THE UNITED STATES is battling a severe shortage of safe-keeping capacity ... it could be only a subject of time, before the country (america) runs out of space for storage.”
Fears that america is performing out of space for storage triggered WTI prices crashing into negative territory last month, prompting some US producers to slash output.
In a sign of that impact, the number of operating coal and oil rigs in the world’s major oil maker fell to 74 in the week to May 8, a record low according to info released on Friday from strength services organization Baker Hughes Co (BKR.N) heading back to 1940.
“Folks are surprised by how quickly the united states is shutting in development and that’s precisely what we need so that you can support prices,” said Mitsubishi’s Nunan.
“There’s another 10 days before the June deal expires ... if the WTI agreement can steer clear of a crash going into expiry, hopefully we’ve found the bottom.”
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