Crude oil benchmarks dropped on Monday, extending last week’s losses as the global coronavirus pandemic worsened and the Saudi Arabia-Russia price war showed no signs of abating.
US West Texas Intermediate (WTI) crude futures hit a low of $19.92 in early trading and last traded down 5.2%, or $1.12, at $20.39 a barrel as of 2332 GMT, while Brent futures fell 5.6%, or $1.40, to $23.53 a barrel.
The oil markets are enduring a twin shock of demand destruction caused by the coronavirus pandemic and the Saudi-Russia price war that is flooding markets with extra supply.
With the demand now forecast to plunge 15 million or 20 million barrels per day, a 20% drop from last year, analysts say massive production cuts will be needed beyond just the Organization of the Petroleum Exporting Countries (OPEC).
The staggering fallout of the virus has swiftly eroded gasoline demand.
In recent days prices for crude oil at key locales such as Midland, Texas, have traded at several dollars less than US futures, an indication that companies there are anticipating a flood of supply. Some obscure grades of crude stranded at the end of pipelines have even fetched negative prices.
US oil production is currently running at roughly 13 million barrels per day, a record, but is expected to drop by more than 1.4 million bpd by the end of the third quarter 2021.